- 15 - Year Gross Income 1988 $325,213 1989 346,593 1990 1321,265 1991 1229,757 1 The parties’ stipulation does not comport with the amounts reflected in the tax returns. The Court has chosen to follow the figures in the returns. Kanter Yachts primarily relied on advertising to sell yachts. The company expended approximately $51,000 to $74,000 in advertising per year. Kanter Yachts had not sold a boat in any of the 12 boat shows attended from 1987 through 1991. Manfred Kanter (Kanter), proprietor of Kanter Yachts, did not believe that petitioners represented Kanter Yachts during 1990. OPINION We must first decide whether petitioners were involved in activities that were “not engaged in for profit” within the meaning of section 183(c). Section 183(a), generally, provides that, if an activity engaged in by an individual is not engaged in for profit, no deduction attributable to such activity shall be allowed, except as provided in section 183(b).4 Section 183(c) defines an activity not engaged in for profit as “any activity other than one with respect to which deductions are allowable for the taxable year under section 162 or under 4 In the case of an activity not engaged in for profit, sec. 183(b)(1) allows a deduction for expenses that are otherwise deductible without regard to whether the activity is engaged in for profit. Sec. 182(b)(2) allows a deduction for expenses that would be deductible if such activity were engaged in for profit, but only to the extent the total gross income derived from the activity exceeds the deductions allowed by sec. 183(b)(1).Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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