Real estate deductions

Carl A. Oser, et ux. v. Commissioner, TC Summary Opinion 2012-19 , Code Sec(s) 162; 212; 274.




CARL A. OSER AND DORIS J. OSER, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent .

Case Information: Code Sec(s): 162; 212; 274

Docket: Docket No. 10680-10S.

Date Issued: 03/1/2012

Judge: Opinion by Dean

Reference(s): Code Sec. 162 ; Code Sec. 212 ; Code Sec. 274





HEADNOTE

1.



Reference(s): Code Sec. 162 ; Code Sec. 212 ; Code Sec. 274



Syllabus

Official Tax Court Syllabus



Counsel

Carl A. Oser and Doris J. Oser, pro sese.

Christopher A. Fisher, for respondent.



Opinion by DEAN



RA Christie determined that petitioners and their family owned 57 parcels of property. Seven of the parcels were removed from the total—four parcels that made up petitioners' personal residence and three parcels that were sold in 2005. During the audit it became clear to RA Christie that petitioners claimed deductions for expenses related to properties that they had transferred or sold to family members. She determined that 7 of the 50 properties were actually rental properties or properties held out for rent that petitioners owned. RA Christie then used that ratio, 7/50, to determine the rental expenses to which petitioners were entitled. 8



Petitioners' arguments to rebut RA Christie's evidence are that they paid the expenses for all of the properties, that the number of properties they and their family owned was inflated, that respondent made up the amounts of expenses to which they were entitled, and that none of their receipts were accepted during the audit.



Petitioners are not allowed deductions for expenses that relate to properties they, personally, did not hold for the production of income. See sec. 212(2). Therefore, petitioners are not allowed deductions for expenses related to properties they transferred or sold to family members.



Petitioners provided no evidence to buttress their arguments that respondent incorrectly calculated the number of their properties or that respondent rejected all of their receipts. In fact the record supports the opposite. Respondent allowed cleaning and maintenance, mortgage interest, repairs, and dumpster expenses on the basis of the 7/50 allocation of receipts or bills for those expenses. Respondent did not allow petitioners deductions for the receipts they could not associate with a specific property. Although petitioner testified that he provided RA Christie with receipts at the audit that were not accepted, he provided none of those receipts at trial.



The Court finds RA Christie's testimony credible and finds her approach used to determine the expenses to which petitioners are entitled reasonable.



Petitioners have failed to prove that they are entitled to more Schedule E expenses than respondent's determinations allowed. Thus, respondent's determinations are sustained.



We have considered all of petitioners' arguments, and, to the extent not addressed herein, we conclude that they are moot, irrelevant, or without merit.