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uninhabitable, and petitioner had no expectation of renting
either in 2002.
Petitioner claimed on her Schedule E, Supplemental Income
and Loss, for 2002, cleaning and maintenance costs of $280 and
taxes of $236 for a “One Family Cottage at 18 Upper, Lubec,
Maine, Lot 128A”. Petitioner also claimed cleaning and
maintenance costs of $280 and taxes of $531 for a “One Family
Cottage at Lot #129, Lubec, Maine, Lot 129”.
In 1997, petitioner purchased a cottage (lot No. 126) near
her Victorian house, again with the plan of repairing and
improving the cottage and renting it to visiting donors and
scientists. The cottage on lot No. 126 was complete and ready
for rental in 2001. On petitioner’s Schedule E, for 2002, she
reported rental income of $500 and claimed depreciation of $4,596
for “2 Lots of Land Next To And, Lubec, Maine, Lot 126”.
Petitioner also claimed for lot No. 126 cleaning and maintenance
costs of $2,501, insurance of $145, repairs of $600, supplies of
$51, taxes of $821, and utilities of $327.
2002 Deficiency
Petitioner filed for 2002 a Form 1040, U.S. Individual
Income Tax Return. Respondent issued to petitioner a statutory
notice of deficiency disallowing a deduction of $9,868,
representing the sum of the rental real estate losses that
petitioner claimed for lot Nos. 126, 128A, and 129 on her
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