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for-profit activity. Allen v. Commissioner, 72 T.C. 28, 32-33
(1979).
The taxpayer bears the burden of establishing that his or
her activities were engaged in for profit.4 Rule 142(a). To
carry this burden, the taxpayer must show that he or she had a
“good faith expectation of profit.” Burger v. Commissioner, 809
F.2d 355, 358 (7th Cir. 1987), affg. T.C. Memo. 1985-523; see
Dreicer v. Commissioner, 78 T.C. 642, 645 (1982), affd. without
published opinion 702 F.2d 1205 (D.C. Cir. 1983). The taxpayer’s
expectation, however, need not be reasonable. Burger v.
Commissioner, supra; Golanty v. Commissioner, 72 T.C. 411, 425
(1979), affd. without published opinion 647 F.2d 170 (9th Cir.
1981); sec. 1.183-2(a), Income Tax Regs. Whether the taxpayer
has the requisite profit motive is a question of fact, to be
resolved on the basis of all relevant circumstances, with greater
weight being given to objective factors than to mere statements
of intent. See Dreicer v. Commissioner, supra; Golanty v.
Commissioner, supra at 426.
4 Sec. 7491, which is effective for examinations commenced
after July 22, 1998, shifts the burden of proof to the
Commissioner under certain circumstances. Petitioner has not
raised the application of this provision. Additionally, we
cannot ascertain from the record whether respondent’s examination
commenced after July 22, 1998. We therefore conclude that sec.
7491 does not operate to shift the bruden of proof in this case.
See Ashley v. Commissioner, T.C. Memo. 2000-376; Daya v.
Commissioner, T.C. Memo. 2000-360; Nitschke v. Commissioner, T.C.
Memo. 2000-230.
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