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did indeed spend a lot of time tracking her properties.
Regardless of whether we believe Mrs. Lapid’s testimony (or think
it “vague, uncorroborated, and self-serving”), we cannot consider
the vast majority of the hours she spent monitoring her
investments in deciding whether she was a material participant.
Unable to count the hours that Mrs. Lapid spent on
investment activity,3 the petitioners’ claim to the loss on their
hotel condos quickly collapses. Though we believe that the
Lapids did at least occasionally visit the condos, the record is
devoid of any evidence that they spent anywhere near 500 hours
doing so. That the hotels did the routine onsite work of
property management undermines the Lapids’ ability to show any
significant amount of time that would count as “participation” in
the activity. And they completely failed to compare the time
they spent with the time spent by individuals actually onsite.
Petitioners do claim, based on all the facts and
circumstances, that Mrs. Lapid participated in the activity on a
regular, continuous, and substantial basis during the year. See
sec. 1.469-5T(a)(7), Temporary Income Tax Regs., supra at 5726.
The regulations state that the taxpayer’s hours spent on
management can count under this test only if no other person is
3 While the regulations permit us to include Mr. Lapid’s
time on these activities, sec. 1.469-5T(f)(3), Temporary Income
Tax Regs., supra at 5727, petitioners presented no evidence that
he spent any time on them beyond performing minor repairs.
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