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respondent contends that petitioner wife’s estimate was neither
reasonable nor reliable. Petitioner wife counters that she still
performs the same activities, which are at issue in this case, so
the computations of time were not based on distant memories.
Based on testimony regarding petitioner wife’s onsite management
of AGI’s employees, petitioner wife contends she has adequately
satisfied the requirement that she materially participated in the
nonrental activity.
We have no doubt that petitioner wife spent substantial time
on the leasing activities and legal support services. Although
this Court has not always accepted a post-event narrative of
participation, we find petitioner wife’s description of her
participation, when combined with witness testimony and the
objective evidence in the record, to be credible, and we
therefore conclude that petitioner wife materially participated
in the activity by participating for more than 500 hours during
the year. See Harrison v. Commissioner, T.C. Memo. 1996-509.
Accordingly, petitioners have satisfied their burden of showing
10(...continued)
not require an analysis under the real estate professional
exception, we apply respondent’s argument to whether petitioner
wife materially participated in the nonrental activity.
Moreover, Shaw is distinguishable from the present case because
many of the hours the taxpayer alleged to have spent materially
participating in the passive activity in Shaw were in fact
“investor type activities”, which are not includable unless the
individual is directly involved in the day-to-day management or
operations of the activity. Sec. 1.469-5T(f)(2)(ii)(A),
Temporary Income Tax Regs., 53 Fed. Reg. 5727 (Feb. 25, 1988).
As we have shown, petitioner wife daily participated in the
management and operations of the activity.
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