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b. Expertise of the Taxpayer or Her Advisers
Preparation for the activity by extensive study of its
accepted business and economic practices or consultation with
experts may indicate that the taxpayer has a profit objective
where the taxpayer carries on the activity in accordance with
those practices. Sec. 1.183-2(b)(2), Income Tax Regs.
Before Mrs. Whitehurst began competing in bowling
tournaments, she consulted with other bowlers and tournament
directors to determine the likelihood of her success in the
tournaments. Mrs. Whitehurst was concerned that she would not be
able to successfully compete against the male bowlers. A NABI
tournament director assuaged her concerns by discussing bowling
lane conditions that were favorable to women and the women’s
records of winnings.
Petitioners consulted with a tax return preparer. Upon the
advice of the tax return preparer, petitioners amended their 1995
return and filed a Form 1040X on which they claimed a loss from
the bowling activity. The tax adviser also advised Mrs.
Whitehurst to keep receipts.
The consultations with experts support the claim that Mrs.
Whitehurst entered into the bowling activity with a profit
objective. See id.
c. Time and Effort Expended by the Taxpayer
The fact that a taxpayer devotes much of her personal time
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Last modified: May 25, 2011