- 13 -
real estate professional, we need not consider whether she
materially participated in the rental activities. See sec.
469(c)(7)(B).
Although petitioners did not raise the issue, we note that
section 469(i) provides an exception to the general rule that
passive activity losses are disallowed. A taxpayer who
“actively participates” in a rental real estate activity can
deduct a maximum loss of $25,000 per year related to the
activity. Sec. 469(i)(1) and (2). This exception is fully
phased out, however, when adjusted gross income (AGI) equals or
exceeds $150,000. Sec. 469(i)(3)(A), (E). Petitioners reported
AGI of $179,359.2 Accordingly, they cannot deduct any amount of
1(...continued)
Hanna testified that overbilling was common among computer
consultants in her position, this practice raises the question of
whether she also inflated the hours reflected in the narrative
summary.
2 Under sec. 469(i)(3)(E)(iv), adjusted gross income (AGI)
is determined without regard to any passive activity loss or any
loss allowable by reason of sec. 469(c)(7). We do not address
the application of sec. 469(i)(3)(E)(iv) to the present case
because the AGI that petitioners reported already exceeds the
$150,000 limitation.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011