- 9 -
that petitioners had abandoned holding the property for profit
from rentals during the years at issue.
The term "profit", however, encompasses the appreciation in
the value of the assets used in the activity. Sec. 1.183-
2(b)(4), Income Tax Regs. The term "income" as it is used in
section 212 "is not confined to recurring income" but may also
apply to gains from the disposition of property. Sec. 1.212-
1(b), Income Tax Regs. The term "income" means not merely income
of the taxable year but includes income the taxpayer "may realize
in subsequent taxable years". Id.
When the returns at issue were filed, petitioners had held
their property in Truckee, located near the Lake Tahoe ski and
vacation area, for 9 or 10 years. Petitioners' personal use of
the property in 2000 was de minimis. The Court also credits the
testimony of petitioner, Sharon Rivera, that she and her husband
purchased the property with the expectation that it would
increase in value and that it had, in fact, substantially
increased in value while they owned it.
The Court finds that petitioners held the property in
Truckee primarily for investment purposes and are therefore
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011