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Although our analysis focuses on the subjective intention of the
taxpayer, greater weight is given to objective facts than to a
taxpayer’s mere statement of intent. See Independent Elec.
Supply Inc. v. Commissioner, 781 F.2d 724 (9th Cir. 1986), affg.
Lahr v. Commissioner, T.C. Memo. 1984-472; Dreicer v.
Commissioner, 78 T.C. 642, 645 (1982), affd. without opinion 702
F.2d 1205 (D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs.
For purposes of section 183, the term “profit” means economic
profit, independent of tax savings. Drobny v. Commissioner, 86
T.C. 1326, 1341 (1986), affd. 113 F.3d 670 (7th Cir. 1997).
Petitioners bear the burden of proving that they had the
requisite profit objective. See Rule 142(a); Golanty v.
Commissioner, supra at 426.
Section 1.183-2(b), Income Tax Regs., sets forth a
nonexclusive list of factors that normally should be taken into
account in determining whether the requisite profit intent has
been shown. The factors are: (1) The manner in which the
taxpayer carries on the activity; (2) the expertise of the
taxpayer or his advisers; (3) the time and effort expended by the
taxpayer in carrying on the activity; (4) 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 loss with
respect to the activity; (7) the amount of occasional profits, if
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