- 12 - Lokken, Federal Taxation of Income, Estates and Gifts, par. 20.1.6, at 20-19 (2d ed. 1989)]. Issue 1. Whether Petitioner Was in a Trade or Business in 1986 Expenses incurred in a trade or business are generally fully deductible. However, an activity must be engaged in for income or profit in order to constitute a trade or business. Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987). This requires the taxpayer to have an "actual and honest objective of making a profit." Ronnen v. Commissioner, 90 T.C. 74, 91 (1988); Dreicer v. Commissioner, 78 T.C. 642, 645 (1982) affd. without pub. op 702 F.2d 1205 (D.C. Cir. 1983). The taxpayer may have a bona fide objective of making a profit, even if the expectation of profit is not reasonable. Hulter v. Commissioner, 91 T.C. 371, 393 (1988); Allen v. Commissioner, 72 T.C. 28, 33 (1979); Dunn v. Commissioner, 70 T.C. 715, 720 (1978), affd. without published opinion 607 F.2d 995 (2d Cir. 1979), affd. on another issue 615 F.2d 578 (2d Cir. 1980). Whether a taxpayer has the requisite actual and honest objective of making a profit is a question of fact to be resolved on the basis of all of the facts and circumstances of the particular case. Golanty v. Commissioner, 72 T.C. 411, 426 (1979), affd. without published opinion 647 F.2d 170 (9th Cir. 1981); Dunn v. Commissioner, 70 T.C. at 720. The taxpayer bears the burden of proof on this issue. Rule 142(a).Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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