James R. and Myrtice L. Peacock - Page 13

                                       - 13 -                                         
          Petitioners bear the burden of proving that PMSI entered into and           
          remained in the fishing activity with the requisite profit                  
          objective.6  Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111,              
          115 (1933); Beck v. Commissioner, 85 T.C. 557, 570 (1985).                  
          Section 183 applies at the corporate level with respect to the              
          activities of an S corporation.  Sec. 1.183-1(f), Income Tax                
          Regs.  For that purpose, however, Ms. Peacock’s intent is                   
          attributable to PMSI, her wholly owned S corporation.  See Eppler           
          v. Commissioner, 58 T.C. 691, 696-699 (1972), affd. without                 
          published opinion 486 F.2d 1406 (7th Cir. 1973); Butler v.                  
          Commissioner, 36 T.C. 1097 (1961); see also Sousa v.                        
          Commissioner, T.C. Memo. 1989-581 (and the cases cited therein).            
               Section 1.183-2(b), Income Tax Regs., sets forth a                     
          nonexclusive list of factors to be considered when ascertaining a           
          taxpayer’s intent.  These factors are:  (1) The manner in which             
          the taxpayer carries on the activity; (2) the expertise of the              
          taxpayer or his advisers; (3) the time and effort expended by the           
          taxpayer in carrying on the activity; (4) the expectation that              
          assets used in the activity may appreciate in value; (5) the                
          success of the taxpayer in carrying on other similar or                     
          dissimilar activities; (6) the taxpayer’s history of income or              
          losses with respect to the activity; (7) the amount of occasional           

               6 Sec. 183(d) provides a statutory reversal of the burden of           
          proof if petitioners meet specified criteria.  Petitioners do not           
          meet those criteria.                                                        

Page:  Previous  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  Next

Last modified: May 25, 2011