Jane Freed - Page 8

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          proving that she conducted her activities with the actual and               
          honest intent to make a profit.  See Purdey v. Commissioner, T.C.           
          Memo. 1989-657, affd. without published opinion 922 F.2d 833 (3d            
          Cir. 1990).                                                                 
               Although section 7491(a) places the burden of proof on the             
          Commissioner with regard to certain factual issues involving                
          examinations commenced after July 22, 1998, which this case was,            
          petitioner does not assert that section 7491(a) shifts the burden           
          to respondent.  Therefore, the burden of proof remains with                 
          petitioner.                                                                 
               Whether a taxpayer has an actual and honest profit objective           
          is determined on the basis of all surrounding facts and                     
          circumstances.  Dreicer v. Commissioner, 78 T.C. 642 (1982),                
          affd. without published opinion 702 F.2d 1205 (D.C. Cir. 1983);             
          sec. 1.183-2(b), Income Tax Regs.  We give greater weight to                
          objective facts than to a taxpayer’s statements of intent.                  
          Dreicer v. Commissioner, supra; sec. 1.183-2(a), Income Tax Regs.           
               We structure our analysis around nine nonexclusive factors.            
          Sec. 1.183-2(b), Income Tax Regs.  The nine factors are:  (1) The           
          manner in which the taxpayer carried on the activity; (2) the               
          expertise of the taxpayer or his or her 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            






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