The petitioners, a married couple, owned several rental properties approximately 26 miles from where they lived. The wife managed the properties, which produced an approximate $70,000 loss for the year at issue. The IRS claimed that the loss was passive and, thus, could not offset the petitioners' active income from other sources. The wife claimed that she qualified as a real estate professional. The IRS did not challenge that she put more than half of her time in the activity, but claimed that she didn't commit at least 750 hours to the rental activity. The wife's log did not initially include commuting time to and from the rental properties (approximately 42-55 minutes each way), but a revised log did. The revised log resulted in the wife putting in more than 750 hours into the activity. The IRS challenged the revised log, but the court upheld its legitimacy due to the wife's testimony and the detailed nature of the log. The revised log was within the guidelines of Treas. Reg. Sec. 1.469-5T(f)(4) and the loss from the activity was fully deductible. O'Neill v. Comr., T.C. Sum. Op. 2015-27.
Records and Credible Testimony Establish that Taxpayer Was Real Estate Pro.
Date of decision:
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