- 17 -
respondent also denied all investment tax credits claimed by
petitioners with respect to certain assets used in the activity.
We begin with an examination of whether Hans Hammann
conducted the charter boat service with the intent to make a
profit. The test for determining whether a taxpayer conducted an
activity for profit is whether he or she entered into, or
continued, the activity with the actual or honest objective of
making a profit. Dreicer v. Commissioner, 78 T.C. 642, 644-645
(1982), affd. without opinion 702 F.2d 1205 (D.C. Cir. 1983);
sec. 1.183-2(a), Income Tax Regs. The taxpayer's expectation of
profit need not be reasonable, but the profit objective must be
bona fide, as judged by all facts and circumstances. Dreicer v.
Commissioner, supra at 645; Golanty v. Commissioner, 72 T.C. 411,
426 (1979), affd. without published opinion 647 F.2d 170 (9th
Cir. 1981); Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965),
affd. 379 F.2d 252 (2d Cir. 1967).
Whether Hans Hammann engaged in the charter boat service
with the requisite profit objective must be determined on a year-
by-year basis from the facts and circumstances of the case.
Golanty v. Commissioner, supra at 426; sec. 1.183-2(a) and (b),
Income Tax Regs. More weight is given to objective facts than to
subjective statements of intent. Sec. 1.183-2(a), Income Tax
Regs. Petitioners bear the burden of proving that Hans Hammann
engaged in the charter boat service with the actual and honest
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011