Commissioner of Internal Revenue v. Hulet P. Smith and Loma M. Smith

The taxpayers, husband and wife, owned a home in Arcadia, California. They acquired a new home a few hundred miles away and moved to it, never intending again to use the Arcadia property as a residence. It was put up for sale, and the Tax Court found that the taxpayers, during the period of time from when they vacated the home until its eventual sale, held it “for the production of income” within the meaning of sections 167(a) (2) and 212(2) of the Internal Revenue Code of 1954. Upon the basis of this finding, it was held that the taxpayers properly deducted maintenance expense, as well as…