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3. The Time and Effort Expended by the Taxpayer in
Carrying On the Activity
The fact that the taxpayer devotes much of his personal time
and effort to carrying on an activity, particularly if the
activity does not have substantial personal or recreational
aspects, may indicate an intention to derive a profit. Sec.
1.183-2(b)(3), Income Tax Regs.
Petitioners contend that Mr. Abbene devoted a considerable
amount of time and effort to the operation of Blue Ribbon which
is indicative of a profit motive. Respondent argues that
petitioners failed to establish the amount of time that Mr.
Abbene devoted to the operation of Blue Ribbon or that he
employed competent and qualified persons to oversee the day-to-
day operations of Blue Ribbon in his absence. See sec. 1.183-
2(b)(3), Income Tax Regs. Respondent contends that Mr. Abbene's
responsibilities to his employer, Pride Chemicals, would
necessarily limit the amount of time that he was able to devote
to Blue Ribbon's activities.
Although the record does not support a finding of the exact
amount of time that Mr. Abbene spent working for Blue Ribbon, we
are convinced that it was substantial. The record indicates that
Mr. Abbene and Elena managed all aspects of Blue Ribbon's
operations. Mr. Abbene devoted his evenings, weekends, and much
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