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an intent to make a profit.1 If petitioners did not have the
requisite profit motive, as respondent maintains, then all
deductions exceeding the revenue attributable to those activities
would be disallowed pursuant to section 183(a).
Respondent contends that petitioners lacked the requisite
intent to make a profit in carrying out their Schedule C
activities. Specifically, respondent asserts that petitioners (1)
did not conduct their Schedule C activities in a businesslike
manner, (2) never earned a profit from any of these activities and
are unlikely to do so in the near future, and (3) realized
substantial tax savings by offsetting the income from their primary
occupations with their Schedule C losses.
On the other hand, petitioners maintain that they entered into
and carried out their Schedule C activities with an intent of
1 For purposes of applying sec. 183, we treat all three
of petitioners’ Schedule C activities as a single activity. In
ascertaining what constitutes an activity or activities of a
taxpayer, we take into account the facts and circumstances of
each case. See sec. 1.183-1(d), Income Tax Regs. Generally, the
most significant factors in making this determination are the
degree of organizational and economic interrelationships of the
various undertakings and the business purpose which is (or might
be) served by carrying on the operations separately or in a trade
or business setting. See id.
In the case at bar, petitioners contend that they entered
into each of their Schedule C activities with the intent of
supplementing their retirement income. All three activities were
operated with the same business purpose, and each shared the
resources and capital of the others; in sum, each Schedule C
activity was organizationally and economically dependent upon the
others. On brief, petitioners treated all three of their
Schedule C activities as one activity.
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