David is lead partner in a local accounting firm whose practice consists of tax consulting and compliance. the firm also seves clients by providing write-up and payroll proccessing services. As his firm has grown, David has developed various ways to build its business prospects. David and his wife, Judy, vreated DJ Partnership to purchase an office building where David moved his practice. Because the building is larger than what the prictice currently needs, space is rented to other tax practitioners. In addition to providing office, space, the partnership offersprofessional and administrative services on an exclusive basis to the tenants. There sevices include secretarial support, telephone answering service, tax professionals available for special projects, access to a tax research library, computer hardwere techology, and miscellaneous administrative support.DJ Partnership consides its primary activity to be providing professional and administrative services toits tenants vs lessor
Because of the attractivness of the services offered to its tenants, the building is fully leased. In the first year, Judy works full time at the parnership, and David commits about 550 hours to its affairs. For the first year, the parnership incurs a tax loss of $60,000 Whithout considering the impact of the loss, David and Judy's AGI is $175,000.
What advise you can give to David?