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for equipment he purchased and leased to his wholly owned
professional corporation, Fred Misko, P.C. (the law firm).
The issues for decision are whether petitioner was engaged
in an equipment leasing activity for profit under section 183,2
and whether the section 469 passive activity rules limit his
depreciation deductions. We find that petitioner engaged in the
activity for profit. To determine whether the passive activity
rules limit petitioner’s depreciation deductions, we must decide
whether petitioner qualifies for the incidental activity
exception to the passive loss rules. We find that petitioner
qualifies.
FINDINGS OF FACT
The parties have stipulated some facts. The stipulation of
facts and the accompanying exhibits are incorporated by this
reference and are so found.
Petitioner was a trial lawyer during the years at issue,
practicing in Dallas, Texas, through the law firm.3 Petitioner
has had a highly successful and varied practice throughout his
35-plus-year legal career. When petitioner first began his law
practice, he managed about 100 cases a year, almost exclusively
2All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
3The professional corporation was a closely held personal
services corporation subject to the provisions of subch. C.
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