Vandegrift v. Comr., T.C. Memo. 2012-14

(petitioners owned nine real estate properties and rented six of them but sold the other three before they were rented; all nine properties treated as rental properties with loss deductions  claimed against gains from sale of three properties; plaintiff claimed he qualified as real estate professional, but didn’t maintain records and couldn’t prove that he spent more than 50 percent of his time in real estate activities; properties that were sold were part of same passive real estate activity and proceeds to be netted with rental loss to determine passive income for year; 20 percent penalty of I.R.C. Sec. 6662 imposed to extent excess basis and expenses claimed on return).