Article Date:
July 2021


Word Count:
1130

 

 

How the IRS Lost $55,000 in This IRS Rental Properties Audit


Situation

 

I just returned from a very unsatisfactory visit with the IRS. The auditor examined my three rental properties, disallowed my losses, and told me to expect a tax bill for $55,000.

 

Current score: IRS $55,000 ahead.

 

One good thing happened, I think. The IRS agreed that my wife is a real estate professional.

 

The bad thing was that the IRS said my wife did not materially participate in the rentals, because the more than 750 hours shown in her logbook that count to make her a real estate professional include time that does not count as material participation, such as time spent

 

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inspecting, analyzing, choosing, and acquiring property;

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reviewing statements, reports, and publications;

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preparing summaries;

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doing computer analysis;

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