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manner in which the taxpayer carries on the activity; the
expertise of the taxpayer or his advisers; the time and effort
expended by the taxpayer in carrying on the activity; the
expectation that assets used in the activity may appreciate in
value; the success of the taxpayer in carrying on other similar
or dissimilar activities; the taxpayer’s history of income or
losses with respect to the activity; the amount of occasional
profits, if any, which are earned; the financial status of the
taxpayer; and elements of personal pleasure or recreation.
Sec. 1.183-2(b), Income Tax Regs. No single factor is
controlling. Golanty v. Commissioner, 72 T.C. 411, 426 (1979),
affd. without published opinion 647 F.2d 170 (9th Cir. 1981).
Whether a taxpayer’s activity has been engaged in for profit is
determined by taking into account all of the facts and
circumstances of the case. Sec. 1.183-2(a), Income Tax Regs.
Petitioners performed a number of functions which have the
superficial indicia of an activity operated for profit. For
example, petitioners testified that they prepared a business plan
with the assistance of their C.P.A., and the stated plan was to
build a network of downline distributors to generate business
volume and ultimately to receive “points” or commissions from
Amway. Petitioners produced a copy of their written goals
(different from their business plan), a one page handwritten
document. Petitioners also maintained and produced a log of
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Last modified: May 25, 2011