Lack of profit objective dooms deductions for real estate activities

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Abstract: Some people are drawn into the real estate game largely for the potential tax benefits — such as leveraging any real estate losses into deductions for business expenses. There’s a catch, though: If the IRS finds a lack of profit motive, the IRS will limit and perhaps disallow the deductions altogether. This article summarizes the case of one taxpayer who recently learned this the hard way. Long v. Comm’r, T.C. Summ. Opin. 2016-88, Dec. 20, 2016 (Tax Ct.)