Richard A. Stasewich - Page 6

                                        - 6 -                                         
          paragraph (1) or (2) of section 212.”  Deductions are allowed               
          under section 162 for the ordinary and necessary expenses of                
          carrying on an activity that constitutes the taxpayer’s trade or            
          business.  Deductions are allowed under section 212 for expenses            
          paid or incurred in connection with an activity engaged in for              
          the production or collection of income or for the management,               
          conservation, or maintenance of property held for the production            
          of income.  With respect to either section, however, the taxpayer           
          must demonstrate the requisite profit objective for the                     
          activities in order to deduct associated expenses.  See                     
          Jasionowski v. Commissioner, 66 T.C. 312, 320-322 (1976); sec.              
          1.183-2(a), Income Tax Regs.                                                
               Whether the required profit objective exists is a question             
          of fact that must be determined on the basis of all of the facts            
          and circumstances of each case.  See Golanty v. Commissioner, 72            
          T.C. 411, 426 (1979), affd. without published opinion 647 F.2d              
          170 (9th Cir. 1981); sec. 1.183-2(a), Income Tax Regs.  While the           
          focus of the test is on the subjective intention of the taxpayer,           
          greater weight is given to the objective facts than to the                  
          taxpayer’s mere statement of his or her intent.  See Independent            
          Elec. Supply, Inc. v. Commissioner, 781 F.2d 724, 726 (9th Cir.             
          1986), affg. T.C. Memo. 1984-472; Dreicer v. Commissioner, 78               
          T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205 (D.C.             
          Cir. 1983); Churchman v. Commissioner, 68 T.C. 696, 701 (1977);             
          sec. 1.183-2(a), Income Tax Regs.                                           

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

Last modified: May 25, 2011