T.C. Memo. 2005-166
UNITED STATES TAX COURT
FRED MISKO, JR. AND KAREN L. HOWE-MISKO, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12996-03. Filed July 6, 2005.
W. John Glancy and Robert E. Davis, for petitioners.
Kathryn F. Patterson and Abbey B. Garber, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
KROUPA, Judge: Respondent determined deficiencies in
petitioners’1 Federal income taxes for 1998 and 1999 based on
disallowing business expense deductions that petitioner claimed
1
Petitioner Karen Howe-Misko was not involved in petitioner
Fred Misko’s law practice, nor was she involved in leasing
equipment to his law practice. All references to petitioner are
to Fred Misko.
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for equipment he purchased and leased to his wholly owned
professional corporation, Fred Misko, P.C. (the law firm).
The issues for decision are whether petitioner was engaged
in an equipment leasing activity for profit under section 183,2
and whether the section 469 passive activity rules limit his
depreciation deductions. We find that petitioner engaged in the
activity for profit. To determine whether the passive activity
rules limit petitioner’s depreciation deductions, we must decide
whether petitioner qualifies for the incidental activity
exception to the passive loss rules. We find that petitioner
qualifies.
FINDINGS OF FACT
The parties have stipulated some facts. The stipulation of
facts and the accompanying exhibits are incorporated by this
reference and are so found.
Petitioner was a trial lawyer during the years at issue,
practicing in Dallas, Texas, through the law firm.3 Petitioner
has had a highly successful and varied practice throughout his
35-plus-year legal career. When petitioner first began his law
practice, he managed about 100 cases a year, almost exclusively
2
All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
3
The professional corporation was a closely held personal
services corporation subject to the provisions of subch. C.
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on behalf of plaintiffs in personal injury actions. Beginning in
the 1980s, however, petitioner shifted his focus to a more
specialized law practice, class actions. Petitioner has been
very successful in this endeavor.
A class-action-based legal practice is unique in several
ways. Since petitioner began focusing on class actions, his case
volume has been smaller, the number of plaintiffs has been
significantly higher, the cases have been more complex, and his
income has increased and become more variable. For example,
petitioner earned $7 million in 1996, but little to nothing from
1997 through 1999. In 1998, petitioner had a $1.6 million loss,
and he earned only a small income in 1999. In 2000, however,
petitioner earned over $6 million when a case he had expected to
close earlier finally closed.
Class action cases also require a huge investment, in time
and money, including traveling abroad, deposing hundreds of
potential claimants, soliciting expensive experts, hiring highly
skilled personnel, purchasing expensive technical equipment, and
partnering with other law firms. At one point, petitioner hired
approximately 80 people and situated them on the entire floor of
a modern office building. In another case, which has been
ongoing for 13 years, petitioner has been representing some
26,000 banana workers from around the world who allegedly were
exposed to a toxic chemical rendering them sterile. Petitioner
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is in a consortium of more than a dozen law firms to manage and
litigate that case. Petitioner finances his cases by investing
an amount personally and then supplementing the remainder with
loans from a bank with which he has had a 15-plus-year working
relationship.
Overall, it often takes longer to settle class action cases,
because of their complexity and the large number of class
members. Predicting when a given case might settle, therefore,
is an imprecise art.
The issue in this case comes from the manner in which
petitioner financially operated his law practice. Each year
petitioner would sit down with his accountant, determine his
salary after expenses, and reinvest most of his after-tax salary
into the law firm.4 In the 1980s, petitioner’s salary began to
substantially increase, and finally, in 1991, he made his first
$1 million salary. Petitioner testified that this prompted him
to reassess his tax posture to determine whether he might
appropriately minimize his tax burden. His accountant
recommended the leasing arrangement at issue.
Petitioner’s accountant said that if petitioner owned the
corporate equipment individually and leased it to the law firm,
he could lower his Medicare tax. Petitioner paid 3 percent in
4
Petitioner reinvests his salary in the form of a loan, and
the law firm pays him interest at 6 percent.
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Medicare tax on his wage income yearly. Medicare tax, unlike
other payroll taxes, is not capped. The idea was that if
petitioner could reduce his wage income and convert some portion
to lease payments instead, he could reduce his overall tax
burden.
Even though petitioner stated that he was legally entitled
to lower his taxes, he was adamant about doing so in an
appropriate and legal manner. The leasing arrangement was ideal
for petitioner, because it was not merely a tax avoidance
vehicle; rather, he would earn a return on the equipment, and he
expected the venture to be profitable.
Moreover, petitioner specialized in the use of the leased
equipment in a class action setting. It was a point of pride
with petitioner that he have the most modern computer graphics
and videotape equipment. He wrote articles and delivered
lectures throughout the United States on the use of technology in
practicing law, particularly in the use of video reenactments,
videotape settlement brochures, and videotape mock trials. His
lectures would address the kinds of equipment to purchase, what
prices to pay, and the level of skill required of employees to
operate the equipment. To illustrate the complexity of the video
reenactments, petitioner testified that in one instance the law
firm charged over $80,000 for an elaborate recreation of a fiery
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truck crash. Petitioner’s technical savvy served as a useful
marketing edge in soliciting new work.
Petitioner first began the leasing arrangement in 1992 by
assigning law firm equipment to himself and leasing it to the law
firm. He then purchased all future equipment personally and
leased it to the law firm. The equipment petitioner leased to
the law firm consisted of computers, video equipment, and office
furniture.5 The original cost of the equipment used in the years
at issue was $1,840,157. From 1992 through 1997, petitioner
received rental payments from the law firm totaling $1,040,000.
Petitioner intended to receive an amount in rent generally
commensurate with the yearly depreciation deduction. During the
years at issue, however, the law firm experienced a loss, and the
law firm made no rental payments. Nor did the firm pay
petitioner a salary in those years. The losses during those
years were attributable to a case that petitioner had expected to
close but that took until 2000 to close. Ultimately,
petitioner’s leasing activity did not prove profitable,
principally because of the losses during the years at issue, and
he later sold the equipment to the law firm at book value for
$557,885. The law firm paid petitioner by increasing the amount
it owed him.
5
The value of the office furniture was a small fraction of
the value of the assets he leased to the law firm.
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Petitioner generally took depreciation deductions on the
equipment he leased the law firm using the modified accelerated
cost recovery system under section 168. Respondent denied the
deductions only in 1998 and 1999, years in which petitioner
experienced losses. Respondent argued that the leasing activity
losses were passive and not deductible without passive income.
Respondent later asserted, in an amended answer, that the
deductions should be denied because petitioner was not engaged in
the equipment leasing activity for profit. Petitioner objected
and argued that he held the equipment for profit and that the
leasing activity was a nonrental activity in which he materially
participated.
Respondent issued petitioners a deficiency notice on May 15,
2003, in which respondent determined deficiencies in petitioners’
Federal income taxes of $74,370 for 1998 and $66,379 for 1999.
Petitioners filed a timely petition.
OPINION
The issues to be decided are, first, whether petitioner’s
equipment leasing activity was engaged in for profit under
section 183, and second, whether the equipment leasing activity
qualifies for the incidental activity exception under section
469.6
6
The Commissioner’s determinations in a deficiency notice
are generally presumed correct, and the taxpayer bears the burden
(continued...)
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I. Whether the Equipment Leasing Activity Was Engaged In for
Profit
Generally, individuals are allowed to fully deduct losses
attributable to an activity engaged in for profit. See secs.
183(a), 162(a), and 212. A taxpayer must engage in an activity
with an actual and honest, even though unreasonable or
unrealistic, profit motive to deduct depreciation expenses. See
Antonides v. Commissioner, 893 F.2d 656, 659 (4th Cir. 1990),
affg. 91 T.C. 686 (1988); Keanini v. Commissioner, 94 T.C. 41, 45
(1990); Hulter v. Commissioner, 91 T.C. 371, 392-393 (1988);
Fuchs v. Commissioner, 83 T.C. 79, 97-98 (1984); Dreicer v.
Commissioner, 78 T.C. 642, 645 (1982), affd. without opinion 702
F.2d 1205 (D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs.;
see also sec. 162(a). Although a reasonable expectation of
profit is not required, the taxpayer’s profit objective must be
bona fide. Hulter v. Commissioner, supra; Beck v. Commissioner,
85 T.C. 557, 569 (1985); sec. 1.183-2(b), Income Tax Regs. This
is a factual question, and to resolve it, we generally look to
nine nonexclusive factors.7 Sec. 1.183-2(b), Income Tax Regs.;
6
(...continued)
of proving otherwise. Rule 142(a); Welch v. Helvering, 290 U.S.
111, 115 (1933). Deductions are generally a matter of
legislative grace, and the taxpayer bears the burden to prove he
or she is entitled to the claimed deductions. INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934).
7
The factors in sec. 1.183-2(b), Income Tax Regs., are:
(continued...)
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see Keanini v. Commissioner, supra at 46; Antonides v.
Commissioner, 91 T.C. at 694; Abramson v. Commissioner, 86 T.C.
360, 371 (1986); Dreicer v. Commissioner, supra at 645; Golanty
v. Commissioner, 72 T.C. 411, 426 (1979), affd. without published
opinion 647 F.2d 170 (9th Cir. 1981); sec. 1.183-2(a) and (b),
Income Tax Regs.
The Court of Appeals for the Fifth Circuit, to which this
case is appealable, requires that the taxpayer engage in the
activity with the “primary purpose” of realizing an economic
profit independent of tax savings. See Commissioner v.
Groetzinger, 480 U.S. 23, 35 (1987); Westbrook v. Commissioner,
68 F.3d 868, 875 (5th Cir. 1995), affg. T.C. Memo. 1993-634; cf.
Keanini v. Commissioner, supra. We therefore apply the “primary
purpose” standard.
Respondent concedes that he bears the burden of proof on
this issue because he raised the claim in an amended answer. See
Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933). To
succeed, therefore, respondent must prove that petitioner did not
7
(...continued)
(1) The manner in which the taxpayer carried on the activity; (2)
the expertise of the taxpayer or his advisers; (3) the time and
effort expended by the taxpayer in carrying on the activity; (4)
the expectation that the assets used in the activity may
appreciate in value; (5) the success of the taxpayer in carrying
on other activities for profit; (6) the taxpayer’s history of
income or losses with respect to the activity; (7) the amount of
occasional profits, if any, which are earned; (8) the financial
status of the taxpayer; and (9) elements of personal pleasure or
recreation.
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enter into the leasing activity with the primary purpose to
profit.
Petitioner argues that we should group the equipment leasing
activity with his law practice in determining whether there was a
profit motive. Alternatively, petitioner argues that, if we do
not group the activities, he engaged in the leasing activity for
profit. Respondent counters that the leasing activity and the
law practice cannot be grouped because they are separate
activities, and that the leasing activity was not an activity
engaged in for profit.
A. Whether Petitioner’s Law Practice and His Leasing
Activity May Be Grouped for Purposes of Section 183
A taxpayer’s various activities may be viewed as a single
activity if they are sufficiently interconnected. See sec.
1.183-1(d)(1), Income Tax Regs. We look to the organizational
and economic interrelationship of the activities, their business
purpose, and their overall similarity in determining whether they
may be viewed collectively. Id. Further, the Commissioner will
generally accept a taxpayer’s characterization of his or her
various undertakings as one activity unless it appears that the
characterization is artificial and unsupported by the facts. Id.
Section 183 applies, however, only to individuals and S
corporations. See sec. 1.183-1(a), Income Tax Regs. (extending
section 183 application to trusts and estates because they are
taxed as individuals). Further, the section 183 regulations
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explicitly except C corporations, stating that no inference may
be drawn from section 183 and its regulations as to whether a
corporation is engaged in an activity for profit. Sec. 1.183-
1(a), Income Tax Regs. The point of amalgamating two
undertakings into a single activity is to net the expenses of one
against the revenue of the other, an objective that cannot be
accomplished where one undertaking is that of a C corporation and
the other is an undertaking by an individual. Because the law
firm was a C corporation, petitioner may not group the law firm
with his leasing activity for purposes of section 183.8
B. Whether the Activity Was Engaged In for Profit
Although we agree with respondent that the leasing activity
and the law practice cannot be grouped, we nonetheless find that
respondent has failed to meet his burden to show that petitioner
did not engage in the leasing activity with the primary purpose
to earn a profit. See Swaffar v. Commissioner, T.C. Memo. 1992-
180 (the Court did not affirmatively find that the taxpayers
lacked a profit objective, but rather found only that the
Commissioner failed to prove that the taxpayers lacked a profit
8
Petitioner also argues that, if we do not group the two
undertakings, the law firm’s profit objective still should be
attributed to his leasing activity. See Campbell v.
Commissioner, 868 F.2d 833 (6th Cir. 1989), revg. T.C. Memo.
1986-569; Wilkinson v. Commissioner, T.C. Memo. 1996-39; De
Mendoza v. Commissioner, T.C. Memo. 1994-314; Kuhn v.
Commissioner, T.C. Memo. 1992-460; cf. Baldwin v. Commissioner,
T.C. Memo. 2002-162. We need not resolve this issue.
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objective, where the issue was raised by the Commissioner as a
new matter). We start by noting that petitioner’s leasing
activity was not a hobby masquerading as a business. See
Cornfeld v. Commissioner, 797 F.2d 1049, 1052 (D.C. Cir. 1986),
revg. T.C. Memo. 1984-105. This distinguishes a large class of
cases where profit objective is reasonably placed in doubt
because the taxpayer derives an intangible personal benefit from
the purported business. Id.; see Bessenyey v. Commissioner, 379
F.2d 252 (2d Cir. 1967) (raising Hungarian half-breds held not to
be an activity for profit), affg. 45 T.C. 261 (1965); sec. 1.183-
2(a), Income Tax Regs. Further, nothing in the record suggests
that petitioner’s equipment was purchased for personal use. See,
e.g., Westerman v. Commissioner, 55 T.C. 478 (1970); Fischer v.
Commissioner, 50 T.C. 164, 171 (1968).
The record establishes without contradiction that petitioner
was an astute businessman and attorney. He earned substantial
income from the law firm, and he accomplished this in part
through his expertise in operating the leased equipment, which
was crucial to his legal practice. Further, petitioner engaged
in the leasing activity on the advice of his accountant, he used
the equipment solely for the law firm, he collected rent
consistently except during the years at issue, he had a high
degree of knowledge and skill related to the equipment, he kept
records regarding amounts invested, rents received, and
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depreciation taken on the equipment, and he derived no personal
pleasure or recreation from using the equipment. We also find
petitioner’s testimony as to his intent to profit from the
equipment leasing activity credible, thorough, and persuasive.
Further, respondent argues that petitioner could not profit
on the amount he charged in rent, yet presented no evidence
regarding prevailing market rental rates for similar equipment.
Respondent also argues that petitioner should have sold the
equipment for fair market value rather than book value, but has
presented no evidence regarding the fair market value of the
equipment, particularly for computer equipment that may lose
value rapidly. Consequently, respondent has not met his burden
to show that petitioner did not engage in the equipment leasing
activity with the primary purpose to earn a profit. Commissioner
v. Groetzinger, 480 U.S. at 35; Wolf v. Commissioner, 4 F.3d 709,
713 (9th Cir. 1993), affg. T.C. Memo. 1991-212; Warden v.
Commissioner, T.C. Memo. 1995-176, affd. without published
opinion 111 F.3d 139 (9th Cir. 1997).
II. Whether the Passive Loss Rules Preclude Petitioner From
Deducting His Losses
Respondent also argues that, if section 183 does not deny
petitioner the loss deduction, then the loss deduction should be
disallowed pursuant to the passive activity loss limitations.
See sec. 469. Petitioner concedes that he has the burden of
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proof on this issue. See Rule 142(a); Welch v. Helvering, 290
U.S. 111 (1933).
Losses from a passive activity are generally not allowed as
a deduction for the year in which they are sustained, except to
the extent of passive activity income. Sec. 469(a). A passive
activity loss is the excess of the aggregate losses from all
passive activities for the taxable year over the aggregate income
from all passive activities for the year. See sec. 469(d)(1).
Passive activities are those activities involving the
conduct of a trade or business in which the taxpayer does not
materially participate. Sec. 469(c)(1). Rental activities are
presumptively passive, without regard to whether the taxpayer
materially participates in the activity. See sec. 469(c)(2),
(4). Both parties agree that petitioner’s equipment leasing
activity is a rental activity and that the income from the
activity is therefore passive, unless petitioner qualifies under
one of six exceptions listed in the regulations. See Welch v.
Commissioner, T.C. Memo. 1998-310; sec. 1.469-1T(e)(3)(ii)(A)
through (F), Temporary Income Tax Regs., 53 Fed. Reg. 5702 (Feb.
25, 1988).9 The exception relevant here is the incidental
9
The Commissioner is given authority under sec. 469(l) to
prescribe regulations to carry out the provisions of the section.
As relevant here, this statutory authority was carried out in
sec. 1.469-1T, Temporary Income Tax Regs., 53 Fed. Reg. 5701
(Feb. 25, 1988), sec. 1.469-5T, Temporary Income Tax Regs., 53
Fed. Reg. 5725 (Feb. 25, 1988), and sec. 1.469-9, Income Tax
(continued...)
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activity exception, and we now address whether this exception
applies to petitioner’s equipment leasing activity.
A. Whether Petitioner Qualifies for the Incidental
Activity Exception
An activity involving the use of tangible property is not
considered a rental activity if the rental is “incidental” to a
nonrental activity of the taxpayer. Sec. 1.469-1T(e)(3)(ii)(D),
Temporary Income Tax Regs., supra. Before we discuss whether
petitioner meets the incidental activity exception, however, we
must determine whether the law firm activity, conducted through a
C corporation, can be classified as an activity of the petitioner
for purposes of the incidental activity exception.
1. Whether Petitioner’s Activities Include Those
Conducted Through His C Corporation
A taxpayer’s activities include those conducted through C
corporations that are subject to the passive loss rules of
section 469. Sec. 1.469-4(a), Income Tax Regs. C corporations
subject to section 469 include closely held C corporations, which
are corporations where at least half the stock is owned by no
more than five individuals. Secs. 469(a)(2)(B), (j)(1),
465(a)(1)(B), 542(a)(2). Because petitioner owned 100 percent of
the stock in the law firm, his professional corporation,
petitioner’s activities included his C corporation activities.
9
(...continued)
Regs. See also sec. 7805.
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See also Schwalbach v. Commissioner, 111 T.C. 215, 225-226
(1998).
2. Whether Petitioner Meets the Incidental Activity
Exception Conditions
To qualify for the incidental activity exception by having a
rental of property treated as incidental to a trade or business
activity, a taxpayer must meet three conditions. See sec. 1.469-
1(T)(e)(3)(vi)(C)(1)-(3), Temporary Income Tax Regs., 53 Fed.
Reg. 5703 (Feb. 25, 1988). First, the taxpayer must own an
interest in the trade or business. Second, the property at issue
must predominantly be used in the trade or business during the
taxable year or during at least 2 of the 5 immediately preceding
taxable years. Third, the gross rental income from the property
for the taxable year must be less than 2 percent of the lesser of
(i) the unadjusted basis of the property and (ii) the fair market
value of such property. Petitioner meets these requirements.
Petitioner owns an interest in the law firm as its exclusive
owner. On the basis of the evidence, the equipment leased to the
law firm was integral to the operation of the law firm. The
equipment was crucial in petitioner presenting his cases, and
petitioner’s particular skill with the equipment increased his
renown in the class-action field. Finally, the parties do not
dispute that petitioner’s gross rental income from the equipment
leasing activity met the percentage requirement, because
petitioner received no rental income during the years at issue.
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Petitioner therefore qualifies for the incidental rental
exception. See Tarakci v. Commissioner, T.C. Memo. 2000-358. We
now address one additional argument by respondent.
3. Whether Petitioner May Simultaneously Use the Equipment
in His Trade or Business and the Rental Activity
Respondent also argues that the incidental activity
exception does not apply here because the exception requires
petitioner to temporarily stop using the property in his trade or
business before using it in a rental activity. In essence,
respondent claims that the exception is not available when the
property is used in the leasing activity and the law firm
“simultaneously” and advances two main arguments in support of
that claim.
First, respondent argues that the regulation uses the past
tense when referring to the use of the property in the trade or
business. See sec. 1.469-1T(e)(3)(vi)(C)(2), Temporary Income
Tax Regs., supra. Respondent focuses on the word “was” in the
regulation to argue that the leased property cannot be used in a
rental and a nonrental activity simultaneously. We disagree.
We note that the word “was” in the regulation refers not
only to past years but also to the current taxable year. See
Philips Petroleum Co. v. Commissioner, 101 T.C. 78, 107 (1993)
(we apply a regulation according to its plain or ordinary
meaning), affd. without published opinion 70 F.3d 1282 (10th Cir.
1995). The incidental activity regulation requires, among other
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things, that “[t]he property was predominantly used in such trade
or business activity during the taxable year.” Id. (emphasis
added). The equipment therefore may be used in petitioner’s law
firm at any time in the taxable year under the incidental
activity exception.
Second, respondent argues that the preamble to the Treasury
Decision in which the incidental activity exception was
promulgated also supports his argument that the property must be
used in the taxpayer’s trade or business before its use in the
taxpayer’s rental activity. See T.D. 8175, 1988-1 C.B. 191. The
preamble states specifically that the exception applies if “an
insubstantial amount of rental income is derived from property
that was recently used in a trade or business activity of the
taxpayer and is temporarily rented.” Id., 1988-1 C.B. at 193.
While the preamble does refer to the use of the property in
the trade or business activity in the past tense and the use of
the property in the rental activity in the present tense, we
believe the preamble merely exemplifies a situation that would
satisfy the incidental activity exception. The preamble does not
bar situations where the property is being used in both
activities at once. Consequently, petitioner may use the
equipment in the law firm concurrently with using it in the
rental activity. See Tarakci v. Commissioner, supra.
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4. Conclusion
Because petitioner has satisfied the incidental activity
exception elements, he is entitled to treat his equipment leasing
activity as incidental to the law firm’s trade or business
activity. Petitioner’s leasing activity, therefore, is a
nonrental activity.
B. Material Participation
Finally, petitioner must also carry his burden to prove that
he materially participated in the activity to qualify the losses
as nonpassive. See sec. 469(c)(1); Welch v. Commissioner, T.C.
Memo. 1998-310. A taxpayer is treated as materially
participating in an activity only if the taxpayer is involved in
the activity on a basis which is regular, continuous, and
substantial. See sec. 469(h)(1).
A taxpayer may satisfy the material participation
requirement if the taxpayer satisfies any one of seven safe
harbor tests. See sec. 1.469-5T(a), Temporary Income Tax Regs.,
53 Fed. Reg. 5725 (Feb. 25, 1988); see also Lapid v.
Commissioner, T.C. Memo. 2004-222 (citing Mordkin v.
Commissioner, T.C. Memo. 1996-187, which upheld the regulatory
“safe harbor” tests letting taxpayers prove material
participation by showing they spent a certain number of hours on
an activity). One test is particularly relevant here.
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An individual may be treated as materially participating in
an activity if his or her participation in that activity during
the taxable year constitutes substantially all of the
participation10 in the activity for that year. Sec. 1.469-
5T(a)(2), Temporary Income Tax Regs., supra. Because petitioner
exclusively engaged in and managed the leasing activity, he meets
this safe harbor test and thus satisfies the material
participation standard. We therefore find that petitioner has
satisfied his burden of showing that he materially participated
in the activity and was involved in the leasing activity on a
regular, continuous, and substantial basis. See sec. 469(c)(1),
(h)(1); sec. 1.469-5T(a)(2), (7), Temporary Income Tax Regs.,
supra.
III. Conclusion
Because we have found that respondent failed to meet his
burden to show petitioner did not engage in the equipment leasing
activity for profit, petitioner’s losses are not limited by
section 183. We have also found that petitioner’s equipment
leasing activity was a nonrental activity in which petitioner
materially participated. Petitioner’s losses, therefore, are not
limited by the passive activity rules of section 469, and
10
“Participation” generally means any work done in an
activity by an individual who owns an interest in the activity.
Sec. 1.469-5(f)(1), Income Tax Regs.
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petitioner may net his equipment leasing activity losses in the
years at issue with the law firm income.
In reaching our holdings, we have considered all arguments
made, and, to the extent not mentioned, we conclude that they are
moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered
for petitioners.