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v. Commissioner, 40 T.C. 914, 917-918 (1963) (costs and fees for
defending suits and indictments for torts and crimes are personal
expenses and not deductible). Respondent is sustained on this
issue.
Petitioner claimed a $142,482 investment loss on the Florida
property.8 The Florida property became part of the settlement
estate in the FTC case, which was used to pay claims of defrauded
customers of the business, and was eventually transferred to the
bankruptcy trustee.
Section 165 allows a deduction for losses incurred in
connection with any transaction entered into for profit, though
not connected with a trade or business. Sec. 165(c)(2). The
burden of proof is on the taxpayer to demonstrate the necessary
profit objective. Rule 142(a); Golanty v. Commissioner, 72 T.C.
411, 426 (1979), affd. without opinion 647 F.2d 170 (9th Cir.
1981). A taxpayer enters a transaction with a profit objective
if "the facts and circumstances * * * indicate that the taxpayer
entered into the activity, or continued the activity, with the
actual and honest objective of making a profit." Dreicer v.
Commissioner, 78 T.C. 642, 645 (1982), affd. without opinion 702
F.2d 1205 (D.C. Cir. 1983); Surloff v. Commissioner, 81 T.C. 210,
8 This amount is derived from a faulty calculation of
petitioner’s basis in the Florida property. However, it is
unnecessary for the Court to determine the correct basis.
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