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management business during the years at issue, (2) that the

activities were entered into for profit within the meaning of

section 183, or (3) that any amount was for an ordinary and

necessary business expense or was expended for the purpose

designated.

Respondent, however, treated the New Jersey house as

property held for the production of income and, pursuant to

section 212,11 allowed petitioner deductions on Schedule E for

claimed expenses relating to the rental of the New Jersey house

before

its

sale.

Respondent

also

allowed

deductions

on

Schedule

A for State and local property taxes for all other properties,

pursuant to section 164, and for interest paid on the Florida

house mortgage, pursuant to section 163(h).

Petitioner contends that he and Mrs. Wood were real estate

dealers and thus the expenses and loss incurred in that business

are

deductible

under

sections

162

and

165.

On

the

other

hand,

respondent asserts that the expenses and loss on the foreclosure

of the Florida house are nondeductible personal expenses and

loss.

11An individual is entitled to deduct all the ordinary and necessary expenses paid or incurred during the taxable year “for

the the

management, conservation, or

production

of

income”.

Sec.

maintenance 212(2).

of

property

held

for

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