- 4 - for the expenses which were in excess of the total amount of rent collected, if necessary. In the notice of deficiency, respondent disallowed $59,918 of the losses claimed by petitioner with respect to the rental properties. Although petitioner disputes the disallowance of the losses, he has made no arguments with respect to this issue, and at trial he stated that this issue “seems to be a matter of law”. Section 469 imposes limits on deductions for losses from any passive activity. Under section 469(a)(1), an individual may not deduct a passive activity loss, which is defined in section 469(d)(1) to be the excess of the individual’s aggregate losses from passive activities over his aggregate income from passive activities. As a general rule, any rental activity is a passive activity. Sec. 469(c)(2). A rental activity in turn is “any activity where payments are principally for the use of tangible property”. Sec. 469(j)(8). Although certain exceptions apply to this general rule, petitioner does not assert, and the record does not show, that any such exceptions apply in this case. Thus, petitioner’s rental activities with respect to the seven properties are passive activities, and petitioner is not allowed a deduction for his aggregate losses with respect thereto. Sec. 469(a)(1). Respondent disallowed $59,918 of the claimed deduction of $62,297 with respect to petitioner’s rental activities; it is not clear from the record why respondent determined that a portionPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011