Floyd L. Garrett and Dorothy G. Garrett - Page 19

                                       - 19 -                                         
          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           
               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             

Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011