- 13 -
Section 1.183-2(b), Income Tax Regs., provides a list of
factors to be considered in the evaluation of a taxpayer’s profit
objective: (1) The manner in which the taxpayer carries on the
activity; (2) the expertise of the taxpayer or his advisors; (3)
the time and effort expended by the taxpayer in carrying on the
activity; (4) the expectation that assets used in the activity
may appreciate in value; (5) the success of the taxpayer in
carrying on other similar or dissimilar activities; (6) the
taxpayer’s history of income or losses with respect to the
activity; (7) the amount of occasional profits, if any, from the
activity; (8) the financial status of the taxpayer; and (9)
elements of personal pleasure or recreation. This list is
nonexclusive, the number of factors for or against the taxpayer
is not necessarily determinative, and more weight may be given to
some factors than to others. Cf. Dunn v. Commissioner, 70 T.C.
715, 720 (1978), affd. 615 F.2d 578 (2d Cir. 1980); sec. 1.183-
2(b), Income Tax Regs.
Petitioners contend that because the activities were profit
motivated they properly reported losses from the ranching and
farming activities. Conversely, respondent asserts that the
activities were not engaged in for profit. We agree with
respondent.6
6 On Schedule F of their tax returns, petitioners reported
the ranching and farming activities on the four properties as one
activity. In their briefs, petitioners seem to argue that the
ranching and farming activities on the four properties are one
activity. Respondent argues that we should treat each property
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011