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To prove that an activity is engaged in for profit, the
taxpayer must show that the activity was engaged in with an
actual and honest objective of making a profit. E.g., Hulter v.
Commissioner, 91 T.C. 371, 392 (1988); Dreicer v. Commissioner,
78 T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205
(D.C. Cir. 1983). Although the taxpayer's expectation of a
profit need not be reasonable, a good faith objective of making a
profit is required. E.g., Dreicer v. Commissioner, supra; Dunn
v. Commissioner, 70 T.C. 715, 720 (1978), affd. on another issue
615 F.2d 578 (2d Cir. 1980); sec. 1.183-2(a), Income Tax Regs.
Petitioners offered no evidence that they pursued the
"Computer Books + Tapes" activity with the requisite profit
objective, and, accordingly, we sustain respondent's disallowance
of the losses claimed from such activity.
To reflect the foregoing,
Decisions will be entered
under Rule 155.
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Last modified: May 25, 2011