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his own services rather than indirectly through the
corporate enterprise * * *.
Id. at 202-203. This Court has interpreted this language to mean
that, in order for a taxpayer to be engaged in a trade or
business of promoting business ventures, he must undertake such
activity for compensation other than a normal investor’s return.
Such compensation must be in the form of a fee or commission or
from the sale of the corporation for a profit in the ordinary
course of business. See Deely v. Commissioner, 73 T.C. 1081,
1093 (1980), supplemented by T.C. Memo. 1981-229. Buying and
selling businesses for profit can constitute a trade or business
if the taxpayer shows that the entities were organized or
acquired with the intent to make a quick and profitable sale
after each business has become established, rather than with a
view toward long-range investment gains. See Id.
In Farrar v. Commissioner, T.C. Memo. 1988-385, this Court
found that a taxpayer was engaged in the trade or business of
promoting business ventures. The taxpayer in Farrar bought and
sold over 31 businesses, acquiring each one with the intent to
bring in his own management staff, rebuild the company, and then
sell it once the business became viable. Of the three businesses
involved for which the taxpayer was claiming losses, the taxpayer
had a plan aimed at earning a profit through the sale of the
business.
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