7
Cir. 1981). The taxpayer's stated intention to make a profit is
not determinative; greater weight is given to objective factors
rather than the taxpayer's mere statement of intent. Engdahl v.
Commissioner, 72 T.C. 659, 666 (1979).
Section 262 precludes a taxpayer from deducting personal,
living, or family expenses that are not incurred in the conduct
of a trade or business or for the production of income.
Based upon the record in this case, we find that petitioner
lacked the requisite profit objective in carrying on his business
activities. Petitioner claims to have operated a water purifier
franchise, yet he failed to produce any receipts for inventory
purchases, advertisement, or related records. He was also unable
to sell any of the units; in fact, he testified at trial that he
eventually gave units away at no charge.
Petitioner operated NSA in a similarly offhand manner.
While he presented a ledger at trial, it failed to differentiate
between personal and business expenses. Furthermore, although
petitioner substantiated the expense of the real estate agent
examination and the payment to the State Industrial Insurance
System, he offers no evidence, such as business cards, a
telephone listing, a client list, or documentation of previous
investments, that he was actively engaged in the real estate
business, or that he conducted the activity with a profit motive.
Petitioner contends that the only expenses he deducted were
ordinary and necessary to his business activities. However, his
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