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that the new purpose was for the production of income.

1.165-9(b)(1), Income Tax Regs.

Sec.

Petitioner and Mrs. Wood purchased the Florida lot with the

intent

to

build

their

personal

residence

on

it.

Petitioner

and

Mrs. Wood used the Florida house as their personal residence

until

it

was

sold

in

1996.

The

property

was

never

rented

or

otherwise

changed

to

income-producing

property.

See,

e.g.,

Newcombe v. Commissioner, 54 T.C. 1298, 1301-1302 (1970); Newbre

v. Commissioner, T.C. Memo. 1971-165.

In sum, we hold that petitioner is not entitled to deduct

any

loss

on

the

foreclosure

of

the

Florida

house.

We

have

considered all of petitioner’s arguments regarding the disallowed

expenses and loss claimed on the property management Schedules C,

and to the extent not specifically addressed, we find them

unpersuasive.

V.

Schedule

A

Itemized

Deductions

For 1994, respondent made the following adjustments to the

itemized deductions petitioner claimed on the 1994 return:

1994 Itemized Deductions

Per Return

Per Exam

Adjustment

$1,365

-0-

$1,365

24,424

$12,456

11,968

42,614

6,632

35,982

-0-

304

(304)

-0-

6,488

(6,488)

–-

(215)

(215)

68,403

25,665

42,738

Medical & dental Taxes Home interest Contributions Miscellaneous AGI limitation

Total

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