- 8 -
activity; (7) the amount of occasional profit, if any, which is
earned; (8) the financial status of the taxpayer; and (9) whether
elements of personal pleasure or recreation are involved. No
single factor controls. See Osteen v. Commissioner, supra;
Brannen v. Commissioner, 722 F.2d 695, 704 (11th Cir. 1984),
affg. 78 T.C. 471 (1982); sec. 1.183-2(b), Income Tax Regs.
1. Manner of Carrying on Activity
The manner in which the taxpayer carries on the activity is
one indication of a profit objective. See sec. 1.183-2(b)(1),
Income Tax Regs. Elements relevant to this factor include
whether the taxpayer maintained complete and accurate books and
records, whether the activity was conducted in a manner
substantially similar to comparable businesses that are
profitable, and whether changes were attempted in order to
improve profitability. See Engdahl v. Commissioner, 72 T.C. 659
(1979).
Petitioner maintained no written records. He had no
business plan for his activity, and he made no predictions of
income or expenses.
Petitioner had no sponsor for the activity, although he did
unsuccessfully attempt to obtain one. While petitioner hoped to
make large amounts of money from this activity, he understood
that without the "big money" of a sponsor to buy "big expensive
parts", a person "can't win the races." Without a sponsor,
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011