Alton F. Emerson - Page 8




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          activity; (7) the amount of occasional profit, if any, which is             
          earned; (8) the financial status of the taxpayer; and (9) whether           
          elements of personal pleasure or recreation are involved.  No               
          single factor controls.  See Osteen v. Commissioner, supra;                 
          Brannen v. Commissioner, 722 F.2d 695, 704 (11th Cir. 1984),                
          affg. 78 T.C. 471 (1982); sec. 1.183-2(b), Income Tax Regs.                 
               1.  Manner of Carrying on Activity                                     
               The manner in which the taxpayer carries on the activity is            
          one indication of a profit objective.  See sec. 1.183-2(b)(1),              
          Income Tax Regs.  Elements relevant to this factor include                  
          whether the taxpayer maintained complete and accurate books and             
          records, whether the activity was conducted in a manner                     
          substantially similar to comparable businesses that are                     
          profitable, and whether changes were attempted in order to                  
          improve profitability.  See Engdahl v. Commissioner, 72 T.C. 659            
          (1979).                                                                     
               Petitioner maintained no written records.  He had no                   
          business plan for his activity, and he made no predictions of               
          income or expenses.                                                         
               Petitioner had no sponsor for the activity, although he did            
          unsuccessfully attempt to obtain one.  While petitioner hoped to            
          make large amounts of money from this activity, he understood               
          that without the "big money" of a sponsor to buy "big expensive             
          parts", a person "can't win the races."  Without a sponsor,                 






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