-15-
None of the factors enunciated in section 1.183-2(b), Income
Tax Regs., favors petitioners other than the absence of personal
pleasure or recreation factor. We conclude, and thus hold, that
petitioner’s investment in the FoodSource container was not made
with an actual and honest profit objective. Petitioners therefore
are not entitled to the depreciation deduction for 1984.10
c. Business Loss
Petitioners have the burden of establishing that petitioner
sustained a loss in a transaction entered into for profit in 1984.
Section 165 provides as follows:
SEC. 165. LOSSES.
(a) General Rule.--There shall be allowed as a
deduction any loss sustained during the taxable year and
not compensated for by insurance or otherwise.
* * * * * * *
(c) Limitation On Losses Of Individuals.-- In the
case of an individual, the deduction under subsection (a)
shall be limited to--
* * * * * * *
(2) losses incurred in any transaction
entered into for profit, though not connected
with a trade or business, * * *
Section 1.165-1(b), Income Tax Regs., provides: “To be allowable as
a deduction under section 165(a), a loss must be evidenced by
10 In light of these holdings, we need not determine
petitioner’s adjusted basis for purposes of investment tax credit
and depreciation.
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