Problem:
Lane Mitchell is a married individual who files a separate return for the taxable year. He is employed full time as an accountant and also owns an interest in a minor league baseball team. He does no work in connection with the baseball activity and anticipates that it will produce a loss. He pays his wife to work as an office receptionist in connection with the activity. Her work requires an average of 20 hours a week. Write a letter to Lane and explain whether he will be allowed to deduct his share of the loss from the activity.