- 7 - 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.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