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the taxable year under section 162 or under paragraph
(1) or (2) of section 212.
The question we must decide is whether Ballard Marine’s
activity with regard to holding the yacht for charter (the
charter activity) constituted an activity “not engaged in for
profit”.
B. Actual and Honest Profit Objective
An activity is engaged in for profit if the taxpayer has an
“actual and honest objective of making a profit.” Keanini v.
Commissioner, 94 T.C. 41, 46 (1990). “Although the section 183
analysis with respect to the activities of a subchapter S
corporation is applied at the corporate level, section 1.183-
1(f), Income Tax Regs., * * * [a taxpayer’s] intent is
attributable to his wholly owned subchapter S corporation.”
Sousa v. Commissioner, T.C. Memo. 1989-581. Moreover, although
the expectation of profit need not be reasonable, it must be
shown that a bona fide profit objective did exist. Golanty v.
Commissioner, 72 T.C. 411, 425-426 (1979), affd. without
published opinion 647 F.2d 170 (9th Cir. 1981); sec. 1.183-2(a),
Income Tax Regs. Profit in this context means economic profit,
independent of tax savings. Hulter v. Commissioner, 91 T.C. 371,
393 (1988). Whether Ballard Marine engaged in the charter
activity with the requisite profit objective is a question of
fact to be determined from all the facts and circumstances;
petitioner bears the burden of proof. Rule 142(a); Keanini v.
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