James R. and Myrtice L. Peacock - Page 23

                                       - 23 -                                         
               iii.  Time and Effort Spent Conducting the Activity                    
               The fact that a taxpayer devotes much of his or her personal           
          time to an activity may indicate a profit intent, especially                
          where the activity does not involve substantial personal or                 
          recreational aspects.  Also, a taxpayer’s withdrawal from another           
          occupation to devote his or her time and effort to an activity              
          may indicate a profit motive.  Burleson v. Commissioner, T.C.               
          Memo. 1983-570; sec. 1.183-2(b)(3), Income Tax Regs.                        
               Petitioners argue that this factor weighs in their favor.              
          We disagree.  Although petitioners devoted their time to the                
          activity during the tournaments, they spent only approximately 3            
          months of the year on that activity.  Moreover, not all of that             
          time was devoted to the fishing activity.  The record reveals               
          that contestants at the tournaments spent much of their time                
          frolicking and reveling with family and friends, and we are                 
          unable to find in the record credible evidence that would                   
          indicate that such was not the case with petitioners.  We also              
          note that Mr. Peacock’s stated reason for leaving the automobile            
          industry in 1993 was to spend more time with his wife rather than           
          to devote his time to another business.  This factor is neutral.            
               iv.  Expectation That Assets Will Appreciate in Value                  
               “Profit” encompasses appreciation in the value of assets.              
          Sec. 1.183-2(b)(4), Income Tax Regs.  Therefore, in evaluating a            
          taxpayer’s intent, we also look to the taxpayer’s expectation               

Page:  Previous  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  Next

Last modified: May 25, 2011