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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,
and
(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
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Last modified: May 25, 2011