8
Petitioners argue that under Campbell v. Commissioner, 868
F.2d 833 (6th Cir. 1989), affg. in part and revg. in part T.C.
Memo. 1986-569, the entire economic relationship and its
consequences should be examined to determine whether there is an
actual profit objective. In the Campbell case, the court held
that a taxpayer could deduct losses from a partnership where the
partnership's only business purpose was to lease an airplane to a
corporation controlled by the partners of the partnership.
Despite repeated losses, the court found a profit motive by
considering the increase of overall wealth of the partners
through the corporation. Petitioners also cite Cornfeld v.
Commissioner, 797 F.2d 1049 (D.C. Cir. 1986), revg. and remanding
T.C. Memo. 1984-105; Horner v. Commissioner, 35 T.C. 231 (1960);
and Louismet v. Commissioner, T.C. Memo. 1982-294.
Petitioners' reliance on these cases is inappropriate. In
De Mendoza v. Commissioner, T.C. Memo. 1994-314, we distinguished
Campbell v. Commissioner, supra, from facts very similar to those
before us, as the latter case did not consider whether two
activities could be considered one for purposes of section 183,
but rather it considered whether a profit motive for one activity
could be derived from the income and profit motive of a related
corporation. In Campbell, the plane leasing partnership was
conducted solely to benefit another business, and was wholly
dependent on that business, while in De Mendoza the polo activity
was in no way dependent on the legal activity. The facts of De
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011