Use of management company prevents taxpayer from claiming active participation in rental property.
The Tax Adviser › Vol. 27 Nbr. 8, August 1996
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Summary
The Tax Court in a memorandum decision found that taxpayers that owned a condominium that was rented for short periods each summer did not materially participate in the business because the work they did was not regular and continuous. The taxpayers cleaned the unit at the end of the summer and apparently satisfied the 100-hour and safe harbor standards, but a rental agent was hired during the summer to advertise, collect keys and manage maintenance. Because the taxpayers did not materially participate in these activities, their losses were treated as passive.
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Extract
Use of management company prevents taxpayer from claiming active participation in rental property.
A recent Tax Court case cited the use of a rental agent in denying the taxpayers' claim that a condominium held for rental was not subject to the passive loss limitations of Sec. 469...
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