- 13 - When the taxpayer conducts an activity in a manner substantially similar to that of other activities of the same manner which are profitable, a profit motive may be indicated. Engdahl v. Commissioner, 72 T.C. 659, 666-667 (1979); sec. 1.183- 2(b)(1), Income Tax Regs. Petitioner presented no evidence about how other basketball teams/skills schools are operated. He did credibly testify, however, that directors of teams like RBS had won lucrative job offers from major athletic shoe and clothing companies. Generally, when considering whether the taxpayer’s conduct is similar to that of other profitable activities of the same nature, the relevant factors for consideration include advertising, maintaining a separate bank account, developing a written business plan, and having a plausible strategy for earning a profit. See Morley v. Commissioner, T.C. Memo. 1998- 312; Butler v. Commissioner, T.C. Memo. 1997-408. Petitioner spent a total of $444 on advertising in the years in issue, plus word-of-mouth advertising at local basketball games. In addition, petitioner attached several newspaper articles as exhibits which mention RBS. The Court has recognized that both word-of-mouth and newspapers can constitute advertising. Petitioner testified that word-of-mouth and news stories were, in fact, the best ways that he could promote his school.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: November 10, 2007