Michael G. Bunney - Page 11

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          at a loss since it began in 1992, the presumption does not apply            
          in this case.                                                               
               The Court of Appeals for the Ninth Circuit, to which an                
          appeal in this case would lie, has held that, for a deduction to            
          be allowed under section 162 or section 212(1) or (2), a taxpayer           
          must establish that he engaged in the activity with the primary,            
          predominant, or principal purpose and intent of realizing an                
          economic profit independent of tax savings.  Wolf v.                        
          Commissioner, 4 F.3d 709, 713 (9th Cir. 1993), affg. T.C. Memo.             
          1991-212; Indep. Elec. Supply, Inc. v. Commissioner, 781 F.2d               
          724, 726 (9th Cir. 1986), affg. Lahr v. Commissioner, T.C. Memo.            
          1984-472; see Prieto v. Commissioner, T.C. Memo. 2001-266, affd.            
          59 Fed. Appx. 999 (9th Cir. 2003).  The taxpayer’s expectation              
          need not be a reasonable one, but the profit objective must be              
          bona fide.  Golanty v. Commissioner, supra at 425-426; sec.                 
          1.183-2(a), Income Tax Regs.  In determining whether the                    
          requisite intention to make a profit exists, greater weight is to           
          be given to the objective facts than to the taxpayer’s self-                
          serving characterization of his intent.  Indep. Elec. Supply,               
          Inc. v. Commissioner, supra at 726; sec. 1.183-2(a), Income Tax             
               Section 1.183-2(b), Income Tax Regs., sets forth a                     
          nonexclusive list of factors to be considered in determining                
          whether the taxpayer has the requisite profit objective.  The               

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