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he hires independent contractors for major repairs. In addition,
he assists his tenants with various tasks, including completing
paperwork for those tenants receiving social services.
Petitioner spends approximately 40-45 hours per week managing the
rental properties.
In 1996, petitioners hired Joseph Mineo, a certified public
accountant, to prepare their 1993 return. Mr. Mineo continued to
prepare petitioners’ returns for all relevant years.
Petitioners attached to their 1993 return a Schedule E,
Supplemental Income and Loss, on which they aggregated
petitioner’s rental income and expenses as if petitioner’s rental
real estate activities were a single activity. Petitioners
consistently followed this practice on the Schedules E attached
to their 1994, 1995, 1996, and 1997 returns. Petitioners,
however, did not attach to any of these returns a statement
electing to treat petitioner’s rental real estate activities as a
single activity.
On April 13, 1999, petitioners filed a joint Federal income
tax return for 1996. On April 4, 2000, petitioners filed a joint
return for 1997. Petitioners attached to each of these returns a
Schedule E on which they identified the rental real estate
property as “Res Rental, Buffalo, NY” and claimed the following:
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