- 7 -
individual is engaged in an activity for the production or
collection of income or for the management, conservation, or
maintenance of property held for the production of income under
section 212, is whether the individual is engaged in the activity
with the predominant purpose and intention of making a profit.
Nickeson v. Commissioner, 962 F.2d 973, 976 (10th Cir. 1992),
affg. Brock v. Commissioner, T.C. Memo. 1989-641; Allen v.
Commissioner, 72 T.C. 28, 33 (1979). While the taxpayer's
expectation need not be reasonable, it must be a good-faith
expectation. Allen v. Commissioner, supra at 33. In resolving
the factual question of the taxpayer's intent, greater weight is
given to the objective facts than to the taxpayer's statements of
intention. Thomas v. Commissioner, 84 T.C. 1244, 1269 (1985),
affd. 792 F.2d 1256 (4th Cir. 1986).
Section 1.183-2(b), Income Tax Regs., sets forth a
nonexclusive list of nine factors to be used to determine whether
an activity is engaged in for profit. The factors are: (1) The
manner in which the taxpayer carries on the activity; (2) the
expertise of the taxpayer or his advisers; (3) the time and
effort expended by the taxpayer in carrying on the activity; (4)
the expectation that the assets used in the activity may
appreciate in value; (5) the success of the taxpayer in carrying
on other similar or dissimilar activities; (6) the taxpayer's
history of income or losses with respect to the activity; (7) the
amount of occasional profits, if any, which are earned; (8) the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011