Orneal and Martha Kooyers, et al. - Page 13

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          contributions, $900 for attorney, accountant, and return preparer           
          fees, and $68,399 for other deductions.  The other deductions               
          included $15,970 for continuing education, $6,037 for travel                
          expenses, $448 for dues and subscriptions, $2,461 for medical,              
          $2,224 for investment expenses, $6,457 for publishing costs,                
          $6,724 for rentals, $760 for repairs and maintenance, $12,041 for           
          supplies, $1,845 for 50 percent of the cost of meals, $4,043 for            
          other trust expenses, and $9,389 for a net operating loss.                  
               On its return, the OMK Family Trust reported an adjusted               
          total loss of $944 ($61 of interest income less net operating               
          loss of $1,005).  The OMK Family Trust also reported (but did not           
          deduct on the basis of the passive activity loss limitations) a             
          net loss of $5,712 from rental real estate activity, which                  
          included $3,318 unallowed losses from prior years.  The $2,394              
          loss from 1998 rental real estate activity reported on Schedule             
          E, Supplemental Income and Loss, derived from rental income of              
          $3,671 and deductions of $120 for repairs, $279 for taxes, $1,991           
          for utilities, and $3,675 for depreciation.                                 
               Respondent examined petitioners’ 1998 return, as well as the           
          returns filed by the OMK trusts, and issued notices of deficiency           
          to petitioners and the OMK trusts.                                          
               In the notice of deficiency issued to the OMK Family Trust,            
          respondent disallowed the claimed rental expenses and increased             
          the trust’s income by the $3,671 rent reported as received on the           






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