Harland and Shirley Stonecipher - Page 11




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          thereto are allowable only to the extent gross income derived               
          from the activity exceeds deductions allowable under section                
          183(b)(1) without regard to whether the activity constitutes a              
          for-profit activity.  See Allen v. Commissioner, 72 T.C. 28, 33             
          (1979).                                                                     
               For purposes of section 183, an activity is not considered             
          engaged in for profit unless it is conducted by the taxpayer with           
          an actual and honest objective of making a profit.  See                     
          Hildebrand v. Commissioner, 28 F.3d 1024, 1027 (10th Cir. 1994),            
          affg. Krause v. Commissioner, 99 T.C. 132 (1992); Antonides v.              
          Commissioner, 91 T.C. 686, 693-694, 696-697 (1988), affd. 893               
          F.2d 656 (4th Cir. 1990); Dreicer v. Commissioner, 78 T.C. 642,             
          645-646 (1982), affd. without opinion 702 F.2d 1205 (D.C. Cir.              
          1983).  Petitioners have the burden of proof.  See Rule 142(a);             
          Cannon v. Commissioner, 949 F.2d 345, 348-349 (10th Cir. 1991),             
          affg. T.C. Memo. 1990-148.                                                  
               The regulations under section 183 provide a nonexclusive               
          list of factors to be considered in determining whether an                  
          activity is engaged in for profit.  The factors include:  (1) The           
          manner in which the taxpayer carried on the activity; (2) the               
          expertise of the taxpayer or his advisors; (3) the time and                 
          effort the taxpayer expended in carrying on the activity; (4) the           
          expectation that assets used in the activity may appreciate in              
          value; (5) the taxpayer’s success in carrying on other                      






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