- 9 - operated the activities in a businesslike manner. Petitioner did testify that he abandoned the videotape sales activity after 3 or more years without success in that activity. However, for at least 3 full years--while petitioner had nearly zero sales or other income from the activities while incurring significant expenses, as discussed in more detail below--petitioner did not make any changes in his operation of this activity. This factor favors respondent. Expertise of the Taxpayer or Advisers A profit objective may be indicated where the taxpayer carries on an activity in accordance with practices learned from extensive study of accepted business and economic practices, or consultation with experts involved therein. Sec. 1.183-2(b)(2), Income Tax Regs. There is no suggestion that petitioner studied accepted business practices or consulted with experts, or that petitioner was already an expert in the field of mental health services or mental health research. This factor favors respondent. Time and Effort Expended by the Taxpayer A profit objective may be indicated where the taxpayer uses much of his personal time and effort to carry on the activity. Sec. 1.183-2(b)(3), Income Tax Regs. Petitioner did not state the exact number of hours he dedicated to these activities. However, we nevertheless are convinced that petitioner spent aPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011