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Commissioner, 734 F.2d 7 (3d Cir. 1984), Kratsa v. Commissioner,
734 F.2d 6 (3d Cir. 1984), Leffel v. Commissioner, 734 F.2d 6 (3d
Cir. 1984), Hook v. Commissioner, 734 F.2d 5 (3d Cir. 1984)).
A determination of profit objective is to be made with
reference to the actions and expectations of those individuals
who manage the affairs of the partnership. Id. (citing Fox v.
Commissioner, supra at 1007-1008).
This Court has recently discussed the nature of this for-
profit test. See Peat Oil & Gas Associates v. Commissioner, 100
T.C. 271 (1993), affd. sub nom. Ferguson v. Commissioner, 29
F.3d 98 (2d Cir. 1994). In the cases at hand, whether the
participants must have profit as their "primary purpose", or
whether it suffices that they have an "actual and honest" profit
objective, does not matter. They have shown neither.
The "subjective" test for business purpose--or profit
objective--shares many characteristics with the "objective"
economic substance test. McCrary v. Commissioner, 92 T.C. 827,
844 (1989). We have already discussed many of these
characteristics in our consideration of economic substance; those
considerations apply with equal force to our conclusion that the
transactions at issue lacked business purpose and a profit
objective.
The Court of Appeals for the Third Circuit has also
explained:
Whether the partnership has the requisite profit
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