James B. and Joan E. Murtaugh - Page 17

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          timeshares were used in a trade or business.  If so, petitioners            
          are entitled to an ordinary loss; if not, petitioners must take a           
          capital loss.                                                               
               The Supreme Court has stated that                                      
               to be engaged in a trade or business, the taxpayer must                
               be involved in the activity with continuity and                        
               regularity and that the taxpayer's primary purpose for                 
               engaging in the activity must be for income or profit.                 
               * * *  [Commissioner v. Groetzinger, 480 U.S. 23, 35                   
               (1987).]                                                               
          On brief, respondent does not dispute that petitioner intended to           
          make a profit as his primary purpose for acquiring the                      
          timeshares; respondent chooses instead to focus on other factors            
          relating to the question of whether petitioner was engaged in a             
          trade or business.  We find that petitioner's primary purpose for           
          purchasing the timeshares was profit.  He chose B'Mae's not based           
          on his personal preferences for a vacation spot but on what he              
          thought would be a viable location for turning a profit.  He                
          thought about the costs and potential rental income.  He visited            
          the property only sparingly, and usually in the off-season.  His            
          purpose for visiting the property was to check up on it, not to             

               9(...continued)                                                        
          real property.  See, e.g., Ames v. Commissioner, T.C. Memo. 1990-           
          87, affd. without published opinion 937 F.2d 616 (10th Cir.                 
          1991), affd. sub nom. Lukens v. Commissioner, 945 F.2d 92 (5th              
          Cir. 1991), affd. without published opinion sub nom. Chesser v.             
          Commissioner, 952 F.2d 411 (11th Cir. 1992), affd. sub nom.                 
          Hildebrand v. Commissioner, 967 F.2d 350 (9th Cir. 1992).                   
          Nonetheless, respondent does not dispute that the timeshares are            
          included within the type of property to which sec. 1221(2)                  
          applies if such property is used in the taxpayer's trade or                 
          business.                                                                   




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