Jeffrey Tamms - Page 14




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          the opportunity to develop evidence regarding, among other                  
          things, the appropriate allocation of expenses if we were to find           
          two or more separate activities--an issue as to which the record            
          currently is silent.                                                        
               In any event, even if we were to consider respondent’s new             
          “separate activity” argument, we would be unpersuaded of its                
          merits.  Section 1.183-1(d)(1), Income Tax Regs. (to which                  
          respondent has not alluded), provides as follows:                           
                    In order to determine whether, and to what extent,                
               section 183 and the regulations thereunder apply, the                  
               activity or activities of the taxpayer must be                         
               ascertained.  For instance, where the taxpayer is                      
               engaged in several undertakings, each of these may be a                
               separate activity, or several undertakings may                         
               constitute one activity.  In ascertaining the activity                 
               or activities of the taxpayer, all the facts and                       
               circumstances of the case must be taken into account.                  
               Generally, the most significant facts and circumstances                
               in making this determination are the degree of                         
               organizational and economic interrelationship of                       
               various undertakings, the business purpose which is (or                
               might be) served by carrying on the various                            
               undertakings separately or together in a trade or                      
               business or in an investment setting, and the                          
               similarity of various undertakings.  Generally, the                    
               Commissioner will accept the characterization by the                   
               taxpayer of several undertakings either as a single                    
               activity or as separate activities.  The taxpayer’s                    
               characterization will not be accepted, however, when it                
               appears that his characterization is artificial and                    
               cannot be reasonably supported under the facts and                     
               circumstances of the case. * * * [Emphasis added.]                     
               We do not believe that petitioner’s characterization of his            
          Schedule C activities as one activity is “artificial and cannot             
          be reasonably supported under the facts and circumstances of the            
          case.”  Id.  The facts indicate substantial linkage between                 





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