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(D.C. Cir. 1983). While a taxpayer need not have a reasonable
expectation of profit, the facts and circumstances must
demonstrate that he or she entered into the activity, or
continued the activity, with the actual and honest objective of
making a profit. Taube v. Commissioner, 88 T.C. 464, 478 (1987);
Dreicer v. Commissioner, supra at 645. The taxpayer’s objective
to make a profit must be analyzed by looking at all the
surrounding facts. Dreicer v. Commissioner, supra at 645. These
facts are given greater weight than the taxpayer’s mere statement
of intent. Id.
The regulations provide a nonexclusive list of relevant
factors which should be considered in determining whether the
taxpayer has the requisite profit objective. The factors are:
(1) The manner in which the taxpayer carries on the activity; (2)
the expertise of the taxpayer or advisers; (3) the time and
effort expended by the taxpayer in carrying on the activity; (4)
the expectation that 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) any elements indicating
personal pleasure or recreation. Sec. 1.183-2(b), Income Tax
Regs. These factors are not applicable or appropriate in every
case. Abramson v. Commissioner, 86 T.C. 360, 371 (1986). The
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Last modified: May 25, 2011