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D. One Activity or Two
Respondent contends that petitioner operated two activities,
a resort activity with no profit motive and a solar equipment
activity with a profit motive. Because we find that petitioner
engaged in the resort activity with a profit motive, it is not
necessary for us to decide whether the solar equipment business
was a separate activity.
E. Conclusion
Petitioner's activity of operating Playa de los Vivos was
an activity engaged in for profit within the meaning of section
183(c). Accordingly, petitioner's expenses attributable to that
activity are allowable as deductions.
II. Negligence
Respondent determined that petitioner is liable for the
accuracy-related penalty prescribed by section 6662 with respect
to 1989 and 1990. Because we have not sustained respondent's
determination of tax deficiencies in petitioner's income tax for
the years in issue, there is no basis for the imposition of the
penalties determined by respondent.
In light of the foregoing,
Decision will be entered
for petitioner.
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Last modified: May 25, 2011