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Respondent determined a deficiency in petitioners’ Federal
income tax of $3,472 for 2001. The sole issue for decision is
whether the passive activity rules of section 469 preclude
petitioners from deducting the full amount of their losses from
their rental real estate activities.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. When they filed their
petition, petitioners resided in Oak Brook, Illinois.
Commencing in January 2001, petitioner Andre Nelson
(petitioner) was employed full time as a Technical Support Team
Manager for the Dial Corporation. He received a $2,500 sign-on
bonus for accepting this position. During 2001, petitioner not
only worked full time for Dial Corporation but also worked
sufficient overtime to earn $5,337 plus $656.30 of “.5 Overtime
Premium” and $545.23 of “Double Time Premium”. He also received
an $850 “Shift Premium”. Petitioner Vena Nelson (Ms. Nelson) is
a certified public accountant employed full time as the chief
financial officer for the Rock of Ages Baptist Church in 2001.
During 2001 petitioners owned three apartment buildings in
Illinois that they operated as rental real properties (rental
properties). These rental properties were: (1) An apartment
building located at 1626 North Luna in Chicago, acquired in 1994
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Last modified: May 25, 2011