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the time and effort expended by the taxpayer in carrying on the
activity; (4) the expectation that 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) the
elements of personal pleasure or recreation. Sec. 1.183-2(b),
Income Tax Regs.
We now consider whether Mrs. Whitehurst’s bowling activity
was an activity she pursued with the objective of making a
profit. Not all of the factors listed above are applicable to
the facts of this case; therefore, we focus on only those factors
that are relevant.
a. Manner in Which the Taxpayer Carries On the Activity
When considering the manner in which the taxpayer carried on
the activity, we may consider whether she carried on the activity
in a businesslike manner and maintained complete and accurate
books and records that indicate that she engaged in the bowling
activity for a profit. Sec. 1.183-2(b)(1), Income Tax Regs. A
change of operating methods, adoption of new techniques, or
abandonment of unprofitable methods may indicate a profit motive.
Id.
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