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profit and economic loss exists in transactions like those
executed by Mr. Resser, there was a basis in law for the
deduction when petitioners filed their return.
Profit motive is required by the provisions of the Internal
Revenue Code governing the option spread transactions at issue.
A loss incurred by an individual, to be deductible under section
165, must be "incurred in a trade or business" or "incurred in
any transaction entered into for profit". Sec. 165(c)(1) and
(2). To be engaged in a trade or business, a taxpayer must be
involved in an activity with continuity and regularity, and the
taxpayer's primary purpose for engaging in the activity must be
for income or profit. Groetzinger v. Commissioner, 480 U.S. 23,
25 (1987). With respect to section 165(c)(2), the term "for
profit" has been "interpreted to require that the 'nontax profit
motive predominates.'" Yosha v. Commissioner, 861 F.2d 494, 499
(7th Cir. 1988), affg. Glass v. Commissioner, 87 T.C. 1087 (1986)
(quoting Miller v. Commissioner, 836 F.2d 1274, 1279 (10th Cir.
1988) revg. 84 T.C. 827 (1985)). More specifically, profit
motive refers to the desire for economic profit, independent of
tax savings. Fox v. Commissioner, 82 T.C. 1001, 1022 (1984);
Surloff v. Commissioner, 81 T.C. 210 (1983).
8(...continued)
motivated. [Resser v. Commissioner, T.C.
Memo. 1991-423.]
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