David Drayer is the lead partner in a local accounting firm whose practice consists of tax consulting and compliance. The firm also serves clients by providing write-up and payroll processing services. As his firm has grown, David has developed various ways to build its business. David and his wife, Judy, created DJ Partnership to purchase an office building where David moved his practice. Because the building is larger than what the practice currently needs, space is rented to other tax practitioners. In addition to providing office space, the partnership offers professional and administrative services on an exclusive basis to the tenants. these services included secretarial support, telephone answering service, tax professionals and miscellaneous administrative support. DJ Partnership considers its primary activity to be providing professional and adminstrative services to its tenants rather than being a lessor. Because of the attractiveness of the services to its tenants, the building is fully leased. In the first year, judy works full-time at the partnership and David commits about 550 hours to its operations. for the first year, the partnership incurs a tax loss of $60,000. Without considering the impact of the loss, David and Judy's AGI is $175,000. Write a letter to David in which you advise him on the deductibility of the $60,000 loss for Federal income tax purposes. Because David is a professional, feel free to make use of technical language in your letter.