Steven Carl Akerson - Page 7

                                                 - 7 -                                                   
            in this section."  Section 183(c) provides:  "For purposes of                                
            this section, the term 'activity not engaged in for profit' means                            
            any activity other than one with respect to which deductions are                             
            allowable for the taxable year under section 162 or under                                    
            paragraph (1) or (2) of section 212."                                                        
                  The question we must decide is whether petitioner's activity                           
            of operating Playa de los Vivos constituted an activity "not                                 
            engaged in for profit".                                                                      
                  B.  Actual and Honest Profit Objective                                                 
                  An activity is engaged in for profit if the taxpayer has an                            
            "actual and honest objective of making a profit."  Keanini v.                                
            Commissioner, 94 T.C. 41, 46 (1990) (quoting Dreicer v.                                      
            Commissioner, 78 T.C. 642, 644-645 (1982), affd. without opinion                             
            702 F.2d 1205 (D.C. Cir. 1983)).  Although the expectation of                                
            profit need not be reasonable, a bona fide profit objective must                             
            exist.  Keanini v. Commissioner, supra at 46; Dreicer v.                                     
            Commissioner, supra; Golanty v. Commissioner, 72 T.C. 411,                                   
            425-426 (1979), affd. without published opinion 647 F.2d 170 (9th                            
            Cir. 1981); sec. 1.183-2(a), Income Tax Regs.  Profit in this                                
            context means economic profit, independent of tax savings.                                   
            Antonides v. Commissioner, 91 T.C. 686, 694 (1988), affd. 893                                
            F.2d 656 (4th Cir. 1990); Hulter v. Commissioner, 91 T.C. 371,                               
            393 (1988).  Petitioner's objective is a question of fact to be                              
            determined from all the facts and circumstances, keeping in mind                             
            that petitioner bears the burden of proof.  Rule 142(a); Keanini                             




Page:  Previous  1  2  3  4  5  6  7  8  9  10  Next

Last modified: May 25, 2011