In Uncategorized on 04/19/2023 at 16:57

No, not the 1960 Peter Sellers jailbreak Britcom; rather, Judge Colvin confronts again the problem of the wannabe real estate pro who has a day job,  and therefore must show that his real estate stretch for year at issue is greater than his day-job stretch. It’s a small claimer, Gregory F. Teague and Rachel S. Teague, T.C. Sum. Op. 2023-16, filed 4/19/23. IRS needs four (count ’em, four) attorneys to fight over a $6800 deficiency from their rehab-and-flipping of three ME cabins.

It’s Greg’s story, as Rachel doesn’t make the cut, and spouses can’t tack on time. “Petitioners appear to contend that they qualify as real estate professionals if we count the total time they both spent working on the cabins. However, in the case of a joint return, the requirements for qualification as a real estate professional are satisfied only if either spouse separately meets the requirements. §469(c)(7)(B). Petitioners do not contend that Mrs. Teague separately qualifies as a real estate professional, and so we do not further consider time she spent in these activities.” T. C. Sum. Op. 2023-16, at p. 5.

Greg’s day job is selling cable tv subscriptions in 60 housing developments. He could work remotely. How much of his time was taken up thereby in year at issue is, in the absence of any logs or contemporaneous records, a wee bit unclear. “At trial Mr. Teague gave several inconsistent estimates of the amount of time he worked for [cable tv company]… including: 40 hours per week (two times), more than 30 hours per week  (two times), 20 to 40 hours per week (three times), and 1,840 hours per year (once). He also varyingly [sic] testified that he took almost six weeks (once) and 29 days (once) of vacation in [year at issue]. Because Mr. Teague held a full-time position… and testified twice that he worked 40 hours per week and once that he worked 1,840 hours per year for [cable tv company] (40 hours per 52 weeks less six weeks of vacation), we find that he worked for [cable tv company] 40 hours per week for 46 weeks (1,840 hours) in [year at issue].” T. C. Sum. Op. 2023-16, at p. 5.

Great witness. I wonder how Greg’s trusty attorney felt as he listened to the foregoing. The rest of Greg’s testimony fares little better.

“We accept Mr. Teague’s testimony that he was at the cabins 102 days in [year at issue]. This claim is consistent with the number of days stated in petitioners’ counsel’s pretrial email…. However, we do not accept petitioners’ claim that Mr. Teague averaged 12 hours of work per day for those 102 days. Petitioners’ claim fails to take into account time he spent eating and participating in recreation activities with his family and friends or [cable tv company] work interruptions.” T. C.  Sum. Op. 2023-16, at p. 6. Judge Colvin lists all the recreational activities in which Greg participated, including without in any way limiting the generality of the foregoing (as my on-their-second-Hanger-10-Gibson colleagues would say) taking “a few minutes to jump in the lake and cool off for a few minutes.” T. C. Sum. Op. 2023-16, at p. 7.

Judge Colvin allows Greg 304 of the 1224 hours he claims. As for Greg’s claim he could multi-task, taking cable tv phonecalls while beavering away on the cabins, he provided no reliable way to divide the time thus spent.

IRS folds the chops, but Greg loses the deficiency.

Takeaway- Buy the timekeeping software if you’re trying for real estate pro.


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