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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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