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Section 1.183-2(b), Income Tax Regs., lists some of the
factors to be considered in determining whether an activity is
engaged in for profit. The factors listed in the regulation are
as follows:
(1) Manner in which the taxpayer carries on the
activity.
(2) The expertise of the taxpayer or his advisors.
(3) The time and effort expended by the taxpayer
in carrying on the activity.
(4) Expectation that assets used in activity may
appreciate in value.
(5) The success of the taxpayer in carrying on
other similar or dissimilar activities.
(6) The taxpayer’s history of income or losses
with respect to the activity.
(7) The amount of occasional profits, if any,
which are earned.
(8) The financial status of the taxpayer.
(9) Elements of personal pleasure or recreation.
These factors are not intended to be exclusive, and no one
factor or majority of the factors need be considered
determinative. See Golanty v. Commissioner, 72 T.C. 411, 426-427
(1979), affd. without published opinion 647 F.2d 170 (9th Cir.
1981).
Petitioner, during his testimony, repeatedly claimed that
the Billfish activity was a business. He claimed that certain
identified employees of the insurance entities used the yacht.
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Last modified: May 25, 2011