Robert and Joyce Dirkse - Page 11

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          making a profit.  Petitioners assert that they operated their               
          Schedule C activities in a businesslike manner.  Petitioners                
          maintain that because the apiary and tree-farming activities were           
          inherently high risk businesses that often require a lengthy                
          startup period, their history of losses relating thereto was not            
          uncommon.  Accordingly, petitioners maintain that they were willing         
          to incur substantial startup costs with the expectation that                
          eventually their Schedule C activities would provide them with              
          supplemental retirement income.                                             
               For the reasons set forth below, we agree with respondent and          
          conclude for each of the years at issue, petitioners’ Schedule C            
          activities were not engaged in for profit.2                                 
               We begin our analysis with the applicable statutory                    
          provisions.  Pursuant to section 183, deductions with respect to an         
          activity “not engaged in for profit” generally are limited to the           
          amount of gross income derived from such activity.  Section 183(c)          
          defines an activity not engaged in for profit as “any activity              
          other than one with respect to which deductions are allowable for           
          the taxable year under section 162 or under paragraph (1) or (2) of         

               2    Because we find that petitioners’ Schedule C activities           
          were not engaged in or carried on for profit, we need not decide            
          respondent’s alternative position that petitioners’ Schedule C              
          losses were passive activity losses subject to the limitations              
          imposed under sec. 469.                                                     

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