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and this opinion shall not be treated as precedent for any
other case.
Respondent determined deficiencies of $13,259, $17,251, and
$17,482 in petitioner’s Federal income tax for 2000, 2001, and
2002, respectively. The issue for decision for each year is
whether petitioner understated his passive activity loss.2 The
resolution of the issue depends upon whether rental income
petitioner received from his closely held corporation is properly
characterized as passive so as to offset passive losses incurred
during the year, as petitioner claims, or whether the rental
income is nonpassive, as respondent determined.
Background
Substantially all of the facts have been stipulated and the
stipulated facts are so found. At the time the petition was
filed, petitioner resided in Gardiner, Maine.
On or about May 14, 1985, petitioner and Mark E. Susi
(Susi), both practicing attorneys, formed Farris & Susi, R.E.
(the real estate partnership), for purposes of buying, selling,
and renting real estate. In the same year, the real estate
partnership acquired property located at 251 Water Street,
Gardiner, Maine (the Gardiner property), which consisted of three
commercial buildings.
2 The parties apparently agree that no portion of his
passive activity loss would be deductible. See sec. 469(a).
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