News From a Recent Court Case | Tax Tip of the Week | No. 134

No Tenants?--Still a Write-off

In a recent Tax Court case (Bonds, TC Summ. Op. 2011-122) the Court said that a lack of tenants is not sufficient grounds to deny a rental expense deduction. In this case, the IRS audited Ms. Bonds’ rental activity and denied her any rental losses due to lack of rental income.  The Tax Court overruled the audit findings and allowed rental losses for the two years after the last tenant moved out.  In the Court’s view, the property was still held for income-producing purposes and she actively participated in the rental activity. Editors Note-- Good for Ms. Bonds!  However, it is still a good rule of thumb, if possible, to show a profit in at least three out of every five years in any business endeavor. Do you have any losses you want to discuss?  Just give us a call. 

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