Charles A. Ballard - Page 12

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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               
               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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