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record. See Benz v. Commissioner, 63 T.C. 375, 382 (1974). In
resolving this factual question, greater weight is accorded
objective facts than a taxpayer's statement of intent. See
Westbrook v. Commissioner, 68 F.3d 868, 875-876 (5th Cir. 1995),
affg. T.C. Memo. 1993-634; sec. 1.183-2(a), Income Tax Regs. For
purposes of deciding whether the taxpayer has the requisite
profit objective, profit means economic profit, independent of
tax savings. See Surloff v. Commissioner, 81 T.C. 210, 233
(1983). The taxpayer bears the burden of proving that he or she
engaged in the activity with the objective of making a profit.
See Rule 142(a); INDOPCO Inc. v. Commissioner, 503 U.S. 79, 84
(1992); Welch v. Helvering, 290 U.S. 111, 115 (1933); Elliott v.
Commissioner, 90 T.C. 960, 971 (1988), (“Petitioners bear the
burden of proving that they engaged in the Amway distributorship
with the intent to make a profit”) affd. without published
opinion 899 F.2d 18 (9th Cir. 1990).
The regulations set forth a nonexhaustive list of factors
that may be considered in deciding whether a profit objective
exists. These 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) the expectation that the assets
used in the activity may appreciate in value; (5) the success of
the taxpayer in carrying on other similar or dissimilar
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