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importance" or "principally". See Malat v. Riddell, 383 U.S.
569, 572 (1966); Fox v. Commissioner, supra; Surloff v.
Commissioner, 81 T.C. 210, 233 (1983). Although profit need not
be the sole motive, if the taxpayer's intent to make a profit is
merely incidental, the taxpayer will not be entitled to the loss
under section 165(c)(2). Cotner v. Commissioner, T.C. Memo.
1996-428.
Consequently, if the taxpayer's overriding purpose for
purchasing the real estate is personal, the requisite profit
motive cannot be established. See O'Neill v. Commissioner, T.C.
Memo. 1985-92; Nicath Realty Co. v. Commissioner, T.C. Memo.
1966-246. Also, if the taxpayer purchases property with the
expectation of making a profit on the sale after it has served
the personal purposes for which it was initially purchased, then
profit motive is not the primary motive. Meyer v. Commissioner,
34 T.C. 528 (1960).
We now analyze whether petitioners possessed the requisite
profit motive to claim a loss under section 165(c)(2). We first
consider the relevant factors outlined under section 1.183-2(b),
Income Tax Regs.
Our first inquiry is whether petitioners purchased the Palm
Springs House in a businesslike manner. We find that
petitioners' behavior in purchasing the Palm Springs House was
not businesslike. Petitioners were not aware of the Palm Springs
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