Schwalbach v. Commissioner
United States Tax Court
Ps rented a building to a personal service corporation for use in a business activity in which P materially participated. On Ps' 1994 Federal income tax return, Ps offset the rental income with unrelated passive losses. Relying on secs. 1.469-2(f)(6) and 1.469-4(a), Income Tax Regs., R determined that Ps could not offset the rental income with the passive losses because the rental income was recharacterized as nonpassive income.
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Ps rented a building to a personal service corporation for use in a business activity in which P materially participated. On Ps' 1994 Federal income tax return, Ps offset the rental income with unrelated passive losses. Relying on secs. 1.469-2(f)(6) and 1.469-4(a), Income Tax Regs., R determined that Ps could not offset the rental income with the passive losses because the rental income was recharacterized as nonpassive income. Ps argue that sec. 1.469-2(f)(6), Income Tax Regs., is invalid as applied to them because the meaning of the word "activity" as used therein does not include…
1Opinion of the Court
STEPHEN AND ANN SCHWALBACH, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Schwalbach v. Commissioner
Tax Ct. Dkt. No. 17502-97
United States Tax Court
111 T.C. 215; 1998 U.S. Tax Ct. LEXIS 45; 111 T.C. No. 9;
September 8, 1998, Filed
Decision will be entered for respondent as to the deficiency, and for petitioners as to the accuracy-related penalty.
Ps rented a building to a personal service corporation for use in a business activity in which P materially participated. On Ps' 1994 Federal income tax return, Ps offset the rental income with unrelated passive losses. Relying on secs.…
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