Paul M. and Wanda E. Harmon - Page 11
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In addition, although she minimizes the amount of time she
spent working for Golden Gate University, teaching even an on-
line version of a course must take some time, and this time would
have to be factored into any analysis of petitioner’s performance
of personal services in 2001.
Because petitioner did not qualify as a real estate
professional, we need not consider whether she materially
participated in the rental activities. See sec. 469(c)(7)(B).
Further, 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’ 2001 AGI
exceeded $150,000. Accordingly, they cannot deduct any amount of
the passive activity loss in 2001. But see sec. 469(b)
(explaining that disallowed losses may be treated as a deduction
allocable to the activity in a succeeding taxable year).
Respondent’s determination is sustained, and to reflect our
disposition of the disputed issue,
Decision will be entered
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Last modified: November 10, 2007