- 10 - The regulations under section 183 provide a nonexclusive list of factors to be considered in determining whether an activity is engaged in for profit. The factors include: (1) The manner in which the taxpayer carries on the activity; (2) the expertise of the taxpayer or his or her advisers; (3) the time and effort the taxpayer expended in carrying on the activity; (4) the expectation that assets used in the activity may appreciate in value; (5) the taxpayer’s success in carrying on other activities; (6) the taxpayer’s history of income or loss with respect to the activity; (7) the amount of occasional profits, if any, which are earned; (8) the taxpayer’s financial status; and (9) whether elements of personal pleasure or recreation are involved. Sec. 1.183-2(b), Income Tax Regs; see also Golanty v. Commissioner, supra. On the basis of the totality of the evidence in the record, we conclude that for the years in issue, petitioner had a good faith expectation of profit from his Schedule C activity. In reaching this conclusion, we view the following factors as being particularly persuasive: Petitioner carried on his activity in a businesslike manner, keeping, as respondent acknowledges on brief, “fairly extensive financial records for his Schedule C activity.” Petitioner responded to JJT’s lack of profitability in earlier years by developing a successful business plan to expand JJT’s undertakings into producing photography exhibitions.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011