Fred Misko, Jr. and Karen L. Howe-Misko - Page 20

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               An individual may be treated as materially participating in            
          an activity if his or her participation in that activity during             
          the taxable year constitutes substantially all of the                       
          participation10 in the activity for that year.  Sec. 1.469-                 
          5T(a)(2), Temporary Income Tax Regs., supra.  Because petitioner            
          exclusively engaged in and managed the leasing activity, he meets           
          this safe harbor test and thus satisfies the material                       
          participation standard.  We therefore find that petitioner has              
          satisfied his burden of showing that he materially participated             
          in the activity and was involved in the leasing activity on a               
          regular, continuous, and substantial basis.  See sec. 469(c)(1),            
          (h)(1); sec. 1.469-5T(a)(2), (7), Temporary Income Tax Regs.,               
          supra.                                                                      
          III. Conclusion                                                             
               Because we have found that respondent failed to meet his               
          burden to show petitioner did not engage in the equipment leasing           
          activity for profit, petitioner’s losses are not limited by                 
          section 183.  We have also found that petitioner’s equipment                
          leasing activity was a nonrental activity in which petitioner               
          materially participated.  Petitioner’s losses, therefore, are not           
          limited by the passive activity rules of section 469, and                   



               10“Participation” generally means any work done in an                  
          activity by an individual who owns an interest in the activity.             
          Sec. 1.469-5(f)(1), Income Tax Regs.                                        





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