- 10 - her absence, and petitioner’s caretaker did not rent the cottage on petitioner’s behalf in 2002. Petitioner testified that during the week that she was in Lubec in 2002, she rented her cottage to a couple for 1 week for $500. The couple drove into town and discovered the cottage’s availability from their inquiries in town. Petitioner did not sign a lease, claiming that it was not the practice in Lubec to sign leases for rentals. Petitioner did not maintain a record of the rental or any business books and records relating to the rental of the cottage. Petitioner admits that she has no expertise in real estate and that she had neither hired nor sought advice from a real estate professional prior to purchasing the cottage. Petitioner has never earned a profit in the rental real estate activity, and her expenses far exceeded income in 2002 as well as in the years prior to and subsequent to that year. There is also little expectation that the cottage will appreciate in value because Lubec is an isolated and economically depressed town. Elements of personal pleasure or recreation may signal the absence of a profit objective. Sec. 1.183-2(b)(9), Income Tax Regs. Petitioner described the cottage on lot No. 126 as “beautiful” and her “pride and joy”, and she clearly enjoyed and obtained pleasure from being in Lubec and having the cottage available for use by donors and colleagues. This, together withPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011