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management business during the years at issue, (2) that the
activities were entered into for profit within the meaning of
section 183, or (3) that any amount was for an ordinary and
necessary business expense or was expended for the purpose
designated.
Respondent, however, treated the New Jersey house as
property held for the production of income and, pursuant to
section 212,11 allowed petitioner deductions on Schedule E for
claimed expenses relating to the rental of the New Jersey house
before its sale. Respondent also allowed deductions on Schedule
A for State and local property taxes for all other properties,
pursuant to section 164, and for interest paid on the Florida
house mortgage, pursuant to section 163(h).
Petitioner contends that he and Mrs. Wood were real estate
dealers and thus the expenses and loss incurred in that business
are deductible under sections 162 and 165. On the other hand,
respondent asserts that the expenses and loss on the foreclosure
of the Florida house are nondeductible personal expenses and
loss.
11An individual is entitled to deduct all the ordinary and
necessary expenses paid or incurred during the taxable year “for
the management, conservation, or maintenance of property held for
the production of income”. Sec. 212(2).
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