- 13 -
Cir. 1986); sec. 1.183-2(a), Income Tax Regs. Petitioners have
the burden of proving that they engaged in the chartering
activity with the intent to make a profit. Rule 142(a).
Section 1.183-2(b), Income Tax Regs., provides a list of
factors to be considered in the evaluation of a taxpayer's profit
objective: (1) The manner in which the taxpayer carries on the
activity; (2) the expertise of the taxpayer or his advisors; (3)
the time and effort expended by the taxpayer in carrying on the
activity; (4) the expectation that assets used in activity may
appreciate in value; (5) the success of the taxpayer in carrying
on other similar or dissimilar activities; (6) the taxpayer's
history of income or losses with respect to the activity; (7) the
amount of occasional profits, if any, from the activity; (8) the
financial status of the taxpayer; and (9) elements of personal
pleasure or recreation. The number of factors for or against the
taxpayer is not necessarily determinative, but rather all facts
and circumstances must be taken into account, and more weight may
be given to some factors than to others. Cf. Dunn v.
Commissioner, 70 T.C. 715, 720 (1978), affd. 615 F.2d 578 (2d
Cir. 1980).
During the years at issue, petitioners did not conduct the
chartering activity in a businesslike manner. Petitioners failed
to maintain any books and records. Herbert testified that they
did not retain receipts from customers. Petitioners also
indicated that they had no business plan for the activity.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011