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petitioners continued to owe $804,407.53 of taxes for the subject
years.
The Albins currently have approximately $825,000 of equity
in a home that they own in Dana Point, California (Dana Point).4
They use that home personally and do not rent it to others. The
Albins also currently own three pieces of rental real estate in
Whittier, California, which they purchased in June 1979,
March 1979, and December 1985, respectively, for $85,000,
$62,500, and $115,000, respectively.5 In 2003, the Albins’
equity in the rental properties totaled approximately $350,000.
The Albins currently lease all three of these rental properties
and, in 2002, they received $49,200 of gross rent and reported
net rental income of $19,618.6
The Albins also currently own a second home, their primary
residence, which they bought in 1987 for $410,000, with a cash
downpayment of $200,000. This second home collateralizes a home
equity loan that the Albins received in 1995 and used to finance
4 Petitioner admits in her brief that the Albins purchased
this home in Dana Point in 1986.
5 Petitioner admits in her brief that the Albins purchased
the last of those three rental properties by making a $20,000
cash downpayment.
6 The Albins also realized $13,848 of income in 1992 from
their interests in two partnerships and one S corporation. One
of these two partnerships was registered with the Commissioner as
a tax shelter.
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