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an active trade or business. Certainly, if purchasing and
renovating muscle cars were to be considered a business, it would
have to be a business that would produce income. Here, income
could be produced by using the cars in the business of collecting
admission from museum patrons and from the sale of the
refurbished muscle cars. Petitioners contend that they were
involved in both of these activities and that each was a separate
business.
In determining whether a taxpayer engages in two or more
separate activities, section 1.183-1(d)(1), Income Tax Regs.,
provides that
all the facts and circumstances of the case must be
taken into account. Generally, the most significant
facts and circumstances in making this determination
are the degree of organizational and economic
interrelationship of various undertakings, the business
purpose which is (or might be) served by carrying on
the various undertakings separately or together in a
trade or business or in an investment setting, and the
similarity of various undertakings. Generally, the
Commissioner will accept the characterization by the
taxpayer of several undertakings either as a single
activity or as separate activities. The taxpayer's
characterization will not be accepted, however, when it
appears that his characterization is artificial and
cannot be reasonably supported under the facts and
circumstances of the case. * * *
Contrary to petitioners' assertion, we do not find that,
during the years in issue, Mr. Garrett was in the trade or
business of refurbishing muscle cars for resale. There is no
evidence that Mr. Garrett sold any muscle cars during the years
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