- 15 - in carrying on a trade or business. An activity qualifies as a trade or business if the taxpayer's primary purpose for engaging in the activity is for income or profit and the activity is performed with continuity and regularity. Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987). A hobby does not qualify as a business. Id. Determining whether a taxpayer's activities rise to the level which constitutes "carrying on a business" requires an examination of the facts in each case. Higgins v. Commissioner, 312 U.S. 212, 217 (1941). In determining the nature of a taxpayer's activities with respect to real property, courts consider the following factors: the nature and purpose of the acquisition of the prop- erty and the duration of the ownership; the continuity of sales or sales-related activity over a period of time; the volume and frequency of sales; the extent to which the taxpayer or his agents have engaged in sales activities by developing or improving the property, soliciting customers, and advertising; and the substan- tiality of sales when compared to other sources of taxpayer's income. * * * [Polakis v. Commissioner, 91 T.C. 660, 670 (1988).] Although during the years at issue Mr. Hawthorne performed a variety of services relating to certain of the properties, for which he was not compensated, he did not sell, or advertise for sale, any of those properties during those years. Indeed, Mr. Hawthorne had not decided throughout the years at issue and thereafter to the time of the trial in this case what he wanted to do with the properties in question, although he preferred to give them away to family members, rather than pay tax on any gains that he would realize if he sold or otherwise disposed of them. On the record before us, we find that petitioners havePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
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