- 13 - Respondent determined that Mr. Abbene's distributive share of Blue Ribbon's losses for each year in issue was zero because Blue Ribbon's activities were activities not engaged in for profit within the meaning of section 183. OPINION Petitioners claim entitlement to Mr. Abbene's share of Blue Ribbon's losses for the taxable years in issue. Petitioners argue that the losses are fully deductible because Blue Ribbon engaged in the activities of horse breeding, horse showing, and providing riding lessons with the requisite profit objective. Petitioners contend that Mr. Abbene formed Blue Ribbon to take advantage of the opportunity to do film and television work with ABC and that he hoped to capitalize on Elena's fame as an Olympic medalist and skill as an accomplished rider to make Blue Ribbon a profitable operation. Respondent contends that the activities were not engaged in for profit. Petitioners bear the burden of proof.15 Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933). Section 1366(a) generally allows shareholders of S corporations to take into account their pro rata share of the 15 Internal Revenue Service Restructuring & Reform Act of 1998 (RRA of 1998), Pub. L. 105-206, sec. 3001, 112 Stat. 685, 726- 727, added sec. 7491, which shifts the burden of proof to the Secretary in certain circumstances. Sec. 7491 is applicable to "court proceedings arising in connection with examinations commencing after the date of the enactment of this Act." RRA of 1998, sec. 3001(c). RRA of 1998 was enacted on July 22, 1998. Accordingly, sec. 7491 is inapplicable to the instant case.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011