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the 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
profits, if any, which are earned; (8) the financial status of
the taxpayer; and (9) elements of personal pleasure or
recreation. Section 1.183-2(b), Income Tax Regs.
Petitioners bear the burden of proving that respondent’s
determinations in the notice of deficiency are in error. Rule
142(a).3
The parties’ stipulation states that SFIS and petitioner
were engaged in “multi-level marketing type activities” with
respect to the products of several companies, and that the 1996
and 1997 gross receipts were from commissions and the sale of
products. However, petitioners have provided no reliable
evidence that any such activities conducted by SFIS or petitioner
had the requisite profit objective. The tax returns filed by
SFIS are merely uncorroborated assertions, not evidence of any
activity. Apart from the generic description in the parties’
stipulation, the only evidence in the record concerning the
purported activities is petitioner’s cursory testimony, which we
3Sec. 7491(a) does not shift the burden of proof to
respondent in this case because petitioners have provided no
credible evidence with respect to the activities of SFIS. Sec.
7491(a)(1).
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Last modified: May 25, 2011