STR 03: How to Stay Clear of Uncle Sam with Must-Know Tax Court Cases for Short-Term Rentals
Tax Smart Real Estate Investors Podcast
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The 2011 Bailey Case Reaffirmed the 2001 Bailey Case, the in Was an Actual Service Business
In the 2011 Bailey case, they kind of reaffirmed the 2001 Bailey case. They disallowed the taxpayers ability to claim the losses on the long-term rentals. But what's interesting is that in was an actual service business. So I find it hard to believe that just because you meet the seven day exception and it's not a rental activity, that it's not otherwise a real property trader business. We reached out to our good friend, Tony Nitti,. He said, my take's the exact same as yours. Don't pay attention to Bailey. That was before the IRS figured out the interplay between the nine regs and the two quantitative tests for real estate status.
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