Estate of Edward Brockenbrough, Deceased, Sharon Brockenbrough, and Suntrust Bank, Coexecutors, and Sharon Brockenbrough - Page 17

                                       - 17 -                                         
          a sign in the window for people to call them if they wanted to              
          see something in the store.  This factor favors respondent.                 
               2.   The Expertise of the Taxpayers or Their Advisors                  
               Preparation for an activity by extensive study of its                  
          accepted business, economic, and scientific practices, and                  
          consultation with experts in the business, may indicate that the            
          taxpayer entered into the activity for profit.  Sec. 1.183-                 
          2(b)(2), Income Tax Regs.  Petitioners had no experience                    
          operating a retail store.  Petitioners spoke to a couple of                 
          people about operating an antique store, but, the record contains           
          little detail about the substance of those conversations, and               
          there is no evidence that petitioners sought any advice about how           
          to correct the store's losses in the years in issue.  See Engdahl           
          v. Commissioner, supra at 668 (continuous consultation with                 
          experts showed profit motive).  This factor favors respondent.              
               3.   Taxpayer's Time and Effort                                        
               The fact that a taxpayer devotes much time and effort to               
          conducting an activity may indicate that the taxpayer has a                 
          profit objective.  Sec. 1.183-2(b)(3), Income Tax Regs.  There is           
          virtually no evidence about how Mrs. Brockenbrough spent her time           
          at the store.  Petitioners did not operate the store on a full-             
          time basis after 1990.  This factor favors respondent.                      









Page:  Previous  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  Next

Last modified: May 25, 2011