Edward C. and Susan R. Hanna - Page 13

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          the hours reflected in the document do not appear reasonable.               
          For example, one entry states that Mrs. Hanna and Mr. Hanna                 
          spent a total of 80 hours preparing their Schedule E and Form               
          4562, Depreciation and Amortization, for their 1999 Federal                 
          income tax return.  Considering that petitioners owned only two             
          rental properties in 1999, this estimate appears excessive.  We             
          are also skeptical that Mrs. Hanna spent an average of 10                   
          minutes to read and respond to an e-mail or to pay a bill.                  
          Finally, the discrepancy between the figures reflected in the               
          narrative summary and those in the document titled “Susan                   
          Hanna’s Activity for Year 2000” casts further doubt on the                  
          process by which petitioners calculated Mrs. Hanna’s rental                 
          activities hours.                                                           
               We conclude that the method petitioners used to calculate              
          Mrs. Hanna’s participation in the rental activities constitutes             
          an impermissible “ballpark guesstimate”.  See, e.g., Fowler v.              
          Commissioner, T.C. Memo. 2002-223.  Petitioners have not                    
          established by reasonable means that Mrs. Hanna performed more              
          than one-half of her personal services in real property trades              
          or businesses in 2000.1  Because Mrs. Hanna did not qualify as a            

               1 Petitioners argue that although Mrs. Hanna was paid for              
          2,119 hours of employment, she worked only 1,850 hours.  They               
          attribute the difference to paid vacation, severance pay, and               
          “billing for hours not really worked”.  Even if we accepted the             
          1,850-hour figure, our conclusion would not change because                  
          petitioners’ method of calculation would still be an                        
          impermissible “ballpark guesstimate”.  Furthermore, while Mrs.              

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