Alfredo A. and Jane R. Galagar - Page 4

                                        - 3 -                                         
          claimed $21,253 rental real estate loss.  Respondent allowed $532           
          of petitioners’ claimed rental real estate loss.                            
               Section 469(a) generally disallows passive activity losses.            
          Section 469(d)(1) defines passive activity loss as the excess of            
          passive activity losses over passive activity income for the                
          taxable year.  Section 469(c)(1) defines passive activity as any            
          activity which involves the conduct of any trade or business, and           
          in which the taxpayer does not materially participate.                      
               Under section 469(c)(2), passive activity includes any                 
          rental activity, “without regard to whether or not the taxpayer             
          materially participates in the activity.”  Sec. 469(c)(4).                  
          However, under section 469(c)(7), section 469(c)(2) does not                
          apply to the rental real estate activities of a taxpayer in the             
          real property business (a real estate professional) if:                     
                    (i) more than one-half of the personal services                   
               performed in trades or businesses by the taxpayer during               
               such taxable year are performed in real property trades or             
               businesses in which the taxpayer materially participates,              
                    (ii) such taxpayer performs more than 750 hours of                
               services during the taxable year in real property trades or            
               businesses in which the taxpayer materially participates.              
          Sec. 469(c)(7)(B).                                                          
               A contemporaneous daily log is not required to establish the           
          hours spent on real estate activities if established by “other              
          reasonable means.”  Sec. 1.469-5T(f)(4), Temporary Income Tax               
          Regs., 53 Fed. Reg. 5727 (Feb. 25, 1988).  Reasonable means                 

Page:  Previous  1  2  3  4  5  6  7  Next

Last modified: May 25, 2011