- 4 -
quiet atmosphere yet stay awake, her supervisors encouraged them
to read while on duty. This enabled Mrs. Lapid to spend two to
three hours a night going over financial statements and summaries
the management companies had sent her. Other hospital staff
often joked about Mrs. Lapid and her briefcase stuffed with
paperwork, and she introduced into evidence samples of what she
reviewed. These included:
• owners’ summary reports,
• maintenance reports,
• condo associations’ audited financial statements,
• inspection summaries,
• condominium newsletters; and
• condominium associations’ annual meeting and election
materials.
Petitioners filed joint returns in 1999 and 2000. In 1999,
they claimed a total loss of $21,021 from the Florida properties.
In 2000, they claimed a total loss of $25,000 from the Florida
and Nevada properties combined. Respondent denied these losses
and sent them a notice of deficiency. Petitioners filed a timely
petition and their case was tried in Detroit.
Discussion
The Code allows taxpayers to deduct most business-related
and profit-seeking expenses under sections 162 and 212; however,
section 469 limits these deductions when they arise from “passive
activities.” Passive activities include both (1) trade or
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011