Steven F. and Kathryn A. Dawson - Page 5

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          taxpayer engages in an activity for profit if he entered into the           
          activity with the actual and honest objective of making a profit.           
          Dreicer v. Commissioner, 78 T.C. 642, 645 (1982), affd. without             
          published opinion 702 F.2d 1205 (D.C. Cir. 1983).  The taxpayer's           
          expectation of profit need not be reasonable, but he or she must            
          have a good faith objective of making a profit.  Allen v.                   
          Commissioner, 72 T.C. 28, 33 (1979); sec. 1.183-2(a), Income Tax            
               The determination of whether a taxpayer conducted the                  
          activity for profit is made based on the facts and circumstances            
          of the case.  Golanty v. Commissioner, 72 T.C. 411, 426 (1979),             
          affd. without published opinion 647 F.2d 170 (9th Cir. 1981).               
          Although the purpose of the inquiry is to ascertain the                     
          taxpayer's subjective intent, greater weight is given to                    
          objective facts than to the taxpayer's statements of intent.                
          Beck v. Commissioner, 85 T.C. 557, 570 (1985); sec. 1.183-2(a),             
          Income Tax Regs.  Petitioners bear the burden of proving they               
          intended to make a profit.  Beck v. Commissioner, supra at 570.             
               Section 1.183-2(b), Income Tax Regs., sets forth a                     
          nonexclusive list of nine factors designed to provide guidance to           
          courts in analyzing a taxpayer's profit objective.  See                     
          Independent Elec. Supply, Inc. v. Commissioner, 781 F.2d 724 (9th           
          Cir. 1986), affg. Lahr v. Commissioner, T.C. Memo. 1984-472;                
          Elliott v. Commissioner, 90 T.C. 960 (1988), affd. without                  
          published opinion 899 F.2d 18 (9th Cir. 1990).  No single factor            

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