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a profit or was instead merely attempting to create and use
losses to offset his income. See Jasionowski v. Commissioner, 66
T.C. 312, 321 (1976); S. Rept. 91-552 (1969), 1969-3 C.B. 423.
To establish that an activity is one engaged in for profit,
a taxpayer must show that the activity was entered into with the
dominant hope and intent of realizing a profit. See Wolf v.
Commissioner, 4 F.3d 709, 713 (9th Cir. 1993) (profit must be the
predominant, primary or principal objective), affg. T.C. Memo.
1991-212; Vorsheck v. Commissioner, 933 F.2d 757, 758 (9th Cir.
1991); Machado v. Commissioner, T.C. Memo. 1995-526, affd.
without published opinion 119 F.3d 6 (9th Cir. 1997); Warden v.
Commissioner, T.C. Memo. 1995-176, affd. without published
opinion 111 F.3d 139 (9th Cir. 1997). We consider whether an
activity is engaged in for profit on a case-by-case basis, taking
into account the facts and circumstances involved. See Golanty
v. Commissioner, 72 T.C. 411, 426 (1979), affd. without published
opinion 647 F.2d 170 (9th Cir. 1981).
Petitioners’ expectation of profit need not be reasonable,
but petitioners must establish that they conducted their
activities with a good-faith expectation of making a profit. See
Engdahl v. Commissioner, 72 T.C. 659, 666, (1979); Golanty v.
Commissioner, supra at 425-426; sec. 1.183-2(a), Income Tax Regs.
In assessing a profit motive, greater weight is to be given to
objective facts than the taxpayer’s mere statement of intent.
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