- 5 -
business and planning aspects of the racing while Benjamin would
concentrate on training and improving his racing skills.
Section 162(a) provides for the deduction of all ordinary
and necessary expenses paid or incurred during the taxable year
in carrying on any trade or business. Whether an activity
constitutes the taxpayer's trade or business within the meaning
of section 162(a) generally depends upon whether the taxpayer's
primary purpose for engaging in the activity is for income or
profit, and whether the activity is conducted with continuity and
regularity. Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987).
Both parties frame the issue in this case as being whether
petitioner's claimed business loss for his management activity is
limited by section 183. Section 183(a) disallows any deductions
attributable to an "activity * * * not engaged in for profit",
except as provided in section 183(b). The parties argue that the
nine factors contained in section 1.183-2(b), Income Tax Regs.,
should guide our decision.
During 1993, petitioner supported Benjamin's participation
in motocross racing. We find that petitioner has extended his
time and effort well beyond the degree that parents ordinarily
devote to their children's "extracurricular" interests. In any
event, simply because he chose to spend an extraordinary amount
of money on behalf of his son and devoted most of his spare time
to Benjamin's motocross racing does not establish that
petitioner's loss was incurred in a profit seeking activity. We
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011