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participation requirements of section 469(c)(1). Sec.
1.469-9(e)(1), Income Tax Regs. Petitioners argue that Mrs.
Harmon is a real estate professional.
A taxpayer qualifies as a real estate professional and is
not engaged in a passive activity if:
(i) more than one-half of the personal services
performed in trades or businesses by the taxpayer
during such taxable year are performed in real property
trades or businesses in which the taxpayer materially
participates, and
(ii) such taxpayer performs more than 750 hours of
services during the taxable year in real property
trades or businesses in which the taxpayer materially
participates.
Sec. 469(c)(7)(B). A trade or business includes being an
employee. Putoma Corp. v. Commissioner, 66 T.C. 652, 673 (1976),
affd. 601 F.2d 734 (5th Cir. 1979); Fowler v. Commissioner, T.C.
Memo. 2002-223. In the case of a joint return, the same spouse
must satisfy each requirement. Sec. 469(c)(7)(B). In the
present case, that means that petitioner must satisfy both
requirements of section 469(c)(7)(B). Accordingly, we focus on
her participation in the rental activity related to the Lyon
Street property.
1. 750-Hour requirement
Petitioners’ position is that Mrs. Harmon spent 774.5 hours
on rental activities in 2001, thus exceeding the 750-hour
requirement of section 469(c)(7)(B)(ii). “The extent of an
individual’s participation in an activity may be established by
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