Raymond J. and Ilene H. Pavelko - Page 10

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          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                     
          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 a              

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