Sheriel L. Sexcius - Page 9

                                           - 9 -                                             
          have maintained with respect to the activity.  She had no set                      
          fees for her services, allowed customers to pay at their                           
          discretion, and made little or no effort to collect outstanding                    
          debts, notwithstanding the fact that she incurred substantial                      
          losses repeatedly over several years.                                              
                The fact that petitioner failed to change her manner of                      
          operation in an effort to reverse her history of losses also                       
          supports respondent's adjustment.  See id.  Although a profit                      
          objective may exist despite a history of losses unaccompanied by                   
          any gains, see, e.g., Bessenyey v. Commissioner, supra at 273-                     
          274, losses continuing beyond the period customarily necessary to                  
          make the operation profitable, if not explained, support the                       
          proposition that the activity is not engaged in for profit.  Sec.                  
          1.183-2(b)(6), Income Tax Regs.  The record reflects that                          
          petitioner operated the activity in 1989 in a similar manner to                    
          its operation in prior years insofar as the general set up of the                  
          activity, the number of students tutored, the time petitioner                      
          devoted to the tutoring activity, etc.  Petitioner did not change                  
          her operating methods from one year to the next in a manner                        
          consistent with an intent to improve profitability and did not                     
          adequately explain why she failed to do so.  Sec. 1.183-2(b)(1),                   
          Income Tax Regs.                                                                   
                Considering her history of losses, petitioner's practices of                 
          neither charging nor collecting fees from customers who were                       






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011