Broadrick R. Moore and Dawn J. Ingram - Page 9




                                        - 8 -                                         
          taxable year in the production or collection of income.  Sec.               
          212(1).  Section 167 allows a depreciation deduction for property           
          used in a trade or business or held for the production of income            
          if the expenses were incurred with a legitimate for-profit                  
          activity.  Sec. 167(a); Hulter v. Commissioner, 91 T.C. 371, 392            
          (1988).                                                                     
               Under section 183(a), no deductions attributable to the                
          Amway activity are allowable unless the activity is engaged in              
          for profit, except as provided in section 183(b).  Sec. 183(a);             
          Elliott v. Commissioner, 90 T.C. at 960; Dreicer v. Commissioner,           
          78 T.C. 642, 643 (1982), affd. without published opinion 702 F.2d           
          1205 (D.C. Cir. 1983).  Petitioners must have entered into or               
          continued the Amway activity with the actual, honest, and bona              
          fide objective of making a profit.  Filios v. Commissioner, 224             
          F.3d 16 (1st Cir. 2000), affg. T.C. Memo. 1999-92; Hulter v.                
          Commissioner, supra at 392-393; Beck v. Commissioner, 85 T.C.               
          557, 569 (1985); Dreicer v. Commissioner, supra at 645; sec.                
          1.183-2(a), Income Tax Regs.                                                
               An activity that is “not engaged in for profit” means any              
          activity other than one with respect to which deductions are                
          allowable for the taxable year under section 162 or section                 
          212(1) or 212(2).  Sec. 183(c); sec. 1.183-2(a), Income Tax Regs.           
               The following nonexclusive factors are relevant in                     
          determining whether an activity is engaged in for profit: The               






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011