1. A couple owned a winter vacation home in Florida. When the husband died, his wife immediately put the house up for sale and never lived in it. It was sold at a loss. The IRS disallowed her capital loss deduction, claiming it was personal and nondeductible. The wife argued that her case was no different from the case of an heir inheriting and selling a home, since at the death of her husband her interest in the property was increased. The Tax Court agreed with her reasoning and allowed the capital loss deduction.

2. A widow inherited a house owned by her late husband and rented out by his estate. Shortly after getting title to the house, she sold it at a loss that she deducted as an ordinary loss. The IRS limited her to a capital loss deduction. The Tax Court agreed. She could not show any business activity. She did not negotiate the lease with the tenant who was in the house when she received title. She never arranged any maintenance or repairs for the building. Moreover, she sold the property shortly after receiving title, which indicates she viewed the house as investment, not rental, property.

3. An inherited residence was rented out by the owner to her brother for $500 a month when the fair market rental value was $700 to $750 per month. When she sold the residence at a loss, the IRS disallowed the loss, and the Tax Court agreed. The below-market rental was treated as evidence that she held the property for personal purposes, not as rental property or as investment property held for appreciation in value.