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Background
We incorporate herein the facts in Ranciato I and repeat
only the facts that are necessary for our discussion.
Discussion
Section 183 limits the deductions for an activity not
entered into for profit. Sec. 183(b). Whether an individual
engages in an activity for profit depends on whether he or she
"[entertains] an actual and honest, even though unreasonable or
unrealistic, profit objective in engaging in the activity."
Ranciato v. Commissioner, 52 F.3d at 25 (citations omitted).
Whether a taxpayer conducts an activity with the requisite profit
intent rests on the facts of the case. Golanty v. Commissioner,
72 T.C. 411, 426 (1979), affd. without published opinion 647 F.2d
170 (9th Cir. 1981). More weight is given to the objective facts
than to an individual's subjective expression of his or her
intent. Sec. 1.183-2(a), Income Tax Regs. Because respondent
determined that petitioner's pet store was an activity not
engaged in for profit, the burden of proof is on petitioner.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
In deciding whether an activity is engaged in for profit, we
are aided by the following nonexclusive factors: (1) The manner
in which the taxpayer carries on the activity; (2) the expertise
of the taxpayer or his or her advisor; (3) the time and effort
expended by the taxpayer in carrying on the activity; (4) the
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