- 10 -
I. Profit Motive
Section 183(a) generally disallows deductions attributable
to activities not engaged in for profit. The Court of Appeals
for the Tenth Circuit, to which an appeal in this case would
normally lie, has stated that the proper test for determining the
required profit motive is whether “profit was the dominant or
primary objective of the venture.” Hildebrand v. Commissioner,
28 F.3d 1024, 1027 (10th Cir. 1994), affg. Krause v.
Commissioner, 99 T.C. 132 (1992); see also Keeler v.
Commissioner, 243 F.3d 1212, 1220 (10th Cir. 2001), affg. Leema
Enters., Inc. v. Commissioner, T.C. Memo. 1999-18. Whether an
activity was engaged in for profit is a factual determination to
be resolved on the basis of all the surrounding facts and
circumstances. Hildebrand v. Commissioner, supra at 1026; Finoli
v. Commissioner, 86 T.C. 697, 722 (1986).
The taxpayer’s objective must be to achieve an economic
profit independent of tax considerations. Hulter v.
Commissioner, 91 T.C. 371, 393 (1988); Gianaris v. Commissioner,
T.C. Memo. 1992-642. Because petitioner is claiming his
deduction through a partnership, the profit objective is
determined at the partnership level. Cannon v. Commissioner, 949
F.2d 345, 349 (10th Cir. 1991), affg. T.C. Memo. 1990-148; Hulter
v. Commissioner, supra at 393; Brannen v. Commissioner, 78 T.C.
471, 505 (1982), affd. 722 F.2d 695 (11th Cir. 1984). In making
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011