- 5 - An individual’s expectation of profit need not be reasonable, but he or she must have a good faith objective of making a profit. Allen v. Commissioner, 72 T.C. 28, 33 (1979); sec. 1.183-2(a), Income Tax Regs. Whether a taxpayer conducts an activity with the requisite profit objective 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 petitioners’ breeding activity was not engaged in for profit, petitioners must prove that respondent's determination is in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933); Westbrook v. Commissioner, supra at 876. Petitioners rely almost exclusively on their limited testimony, which focuses mainly on taxable years preceding the years in issue, as well as the scant testimony of Stephen and Kim, which also is aimed primarily at prior years. The only exhibits in evidence are: (1) Petitioners’ 1979 through 1994 Forms 1040 and (2) the subject notice of deficiency. The parties stipulated to minimal facts, and all of these stipulated facts are best described as favorable to respondent. We are aided by the following nonexclusive factors in deciding whether an activity is engaged in for profit: (1) The manner in which the taxpayer carries on the activity; (2) the expertise of the taxpayer or his or her adviser; (3) the time andPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011