Mr. Richie is a wealthy rancher in Texas. He does not like to get his hands dirty, so he hires a professional management company to run the ranch. The property generated a $500,000 loss this year. Can Mr. Richie deduct this loss on his tax return given the material-participation rules of IRC 469?

1. Turn in a client letter address the letter to Mr. Richie and explain whether he can deduct the loss or not and your reasoning for your conclusion.

2. Give Mr. Richie guidance on what he can do in the future to strengthen his position with regard to IRC 469 for deducting his losses, should they continue.