Tony L. Zidar and Kathleen I. Zidar - Page 15




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               3.   Time and Effort Expended in Activity                              
               Time and effort expended in carrying on an activity may be             
          indicative of profit motive, particularly in the absence of                 
          substantial personal or recreational elements associated with the           
          activity.  Sec. 1.183-2(b)(3), Income Tax Regs.  During 1992,               
          Tony devoted 100 to 300 hours to his stock car activity.  We                
          believe that this time expended is less indicative of a profit              
          motive than of Tony’s love of stock car racing.                             
               A taxpayer’s withdrawal from another occupation to devote              
          most of his energies to the activity may evidence a profit                  
          motive.  Id.  Tony testified that he reported to work at CRC                
          every day while conducting his stock car activity.                          
               This factor favors respondent.                                         
               4.   Expectation That Assets May Appreciate in Value                   
               On reply brief, petitioners concede that they did not expect           
          Tony’s stock car to appreciate in value.                                    
               5.   Taxpayer’s Success in Other Activities                            
               If the taxpayer has engaged in similar activities in the               
          past and converted them from unprofitable to profitable                     
          enterprises, this circumstance may indicate that the activity in            
          question was entered into for profit, even though it is presently           
          unprofitable.  Sec. 1.183-2(b)(5), Income Tax Regs.  Although               
          Tony had been involved with automobile racing since 1968, the               
          evidence does not indicate that his previous involvement was for            
          profit or profitable.  Although Tony and Robert once owned a                





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