- 13 -
1.183-2(b)(5), Income Tax Regs. There is no evidence petitioner
had previously engaged in the business of developing or
profitably exploiting new technologies of the sort involved in
this matter.
This factor does not support a conclusion that petitioner's
activity was profit motivated.
8 & 9. Financial Status of Taxpayer and Elements of Personal
Pleasure
Substantial income from sources other than an activity,
particularly if the activity's losses generated substantial tax
benefits, may indicate that the activity is not engaged in for
profit. This is especially true where there are personal or
recreational elements involved. Sec. 1.183-2(b)(8) and (9),
Income Tax Regs. Petitioner's average salary as a pilot for the
period 1988-90 was over $137,500. During the first 14 years of
the project, petitioner's outlays were approximately $16,000 a
year, approximately 11 percent of his earnings for the years in
issue. This is not out of line with what a person in
petitioner's income bracket might spend on a hobby or
recreational activity. Petitioner was driven more by a desire to
satisfy his intellectual curiosity and to vindicate his theories
than by the potential for deriving a profit. Thus there is a
considerable element of personal pleasure or satisfaction in
petitioner's efforts.
These factors do not support a conclusion that petitioner's
activity was profit motivated.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011