- 25 -
fourth factor is not directly relevant in the instant case.
Moreover, insofar as this factor is relevant, it would weigh in
favor of petitioner. The fact that BRVC purchased and frequently
utilized the aforementioned equipment indicates an effort by
petitioner to operate BRVC in a professional manner.
The fifth factor examines whether the taxpayer experienced
success in carrying on other similar or dissimilar activities.
Although there is some indication in the record that petitioner
operated a similar activity sometime prior to 1981, the record is
devoid of any details regarding the profitability or manner and
length of conduct of this business. Thus, the Court finds that
this factor is inapplicable to the instant case.
The sixth factor is the history of the activity's income and
losses. Although BRVC sustained losses for nearly each year of
its operation, the gross income of BRVC was consistently in the
40- to 50-thousand dollar range for the years 1986 through 1989.
Although no return information was submitted for years prior to
1986, the record indicates that BRVC generated gross income close
to $50,000 for each of the years 1984 and 1985. BRVC gross
income dropped to approximately $13,000 in 1990, $9,000 in 1991,
and zero in 1992. Respondent contends that this dramatic decline
in gross income, coupled with the history of losses, indicates
that petitioner lacked profit motive in the operation of BRVC.
The Court disagrees.
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011