- 15 -
activity, but claimed expenses of $20,122. For 1991, the parties
agree that petitioner received approximately $2,864 from her
photography activity, but claimed expenses of $19,230. For 1992,
petitioner received approximately $1,711 from her photography
activity, but claimed expenses of $17,636.
While losses incurred during the early stage of an activity
might not necessarily indicate that the activity is not engaged
in for profit, continued losses after the period customarily
required to bring an operation to profitability, if not
explainable by ordinary business reverses, may indicate that the
activity is not engaged in for profit. Sec. 1.183-2(b)(6),
Income Tax Regs. Petitioner has not attempted to establish the
period customarily required to bring a photography business to
profitability, nor has she offered adequate reasons for the
substantial continuing losses experienced by her photography
activity. Given the circumstances of the instant case,
petitioner's claimed losses indicate that the photography
activity was not engaged in for profit. Considering petitioner's
financial status, it appears to us that the income derived from
petitioner's other employment enabled her to continue to engage
in her photography activity in the manner in which she conducted
it, indicating that the photography activity was not engaged in
for profit. Engdahl v. Commissioner, 72 T.C. 659, 670 (1979).
Petitioner's losses offset in large part the income she derived
from other sources.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011