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activity is engaged in for profit is whether the taxpayer engages
in the activity with the primary objective of making a profit.
See Antonides v. Commissioner, 893 F.2d 656, 659 (4th Cir. 1990),
affg. 91 T.C. 686 (1988). Although the expectation need not be
reasonable, the expectation must be bona fide. See Hulter v.
Commissioner, 91 T.C. 371, 393 (1988). Furthermore, in resolving
the question, greater weight is given to the objective facts than
to the taxpayer’s statement of intentions. See Thomas v.
Commissioner, 84 T.C. 1244, 1269 (1985), affd. 792 F.2d 1256 (4th
Cir. 1986).
Section 1.183-2(b), Income Tax Regs., contains a
nonexclusive list of factors to be used in determining whether an
activity is engaged in for profit. 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 similar
or dissimilar activities; (6) the history of income or losses
with respect to the activity; (7) the amount of occasional
profit, if any; (8) the financial status of the taxpayer; and (9)
any elements of personal pleasure or recreation. No single
factor, nor simple numerical majority of factors, is controlling.
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