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effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Respondent determined deficiencies in petitioners’ Federal
income taxes of $20,582 and $21,861 for the taxable years 1998
and 1999, respectively.
The issue for decision is whether petitioner husband’s
(petitioner’s) leasing activity is “insubstantial” in relation to
his S corporation business activity, such that petitioners may
group the activities for purposes of the section 469 passive
activity loss rules pursuant to section 1.469-4(d)(1)(A), Income
Tax Regs.1
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Arlington, Minnesota, on the date the petition was filed in this
case.
Petitioner is the majority owner of Pro Flight Center, Inc.,
(PFC), an S corporation which was incorporated in February 1996.
After acquiring the assets of the former Stensin Aviation, PFC
began its business activity at the Beaver County Airport in
Beaver Falls, Pennsylvania, on March 15, 1996. The assets
acquired from Stensin Aviation included five airplanes, a fuel
1Petitioners do not dispute any other adjustments in the
statutory notice of deficiency.
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