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or group of factors is determinative. Sec. 1.183-2(b), Income
Tax Regs.; Golanty v. Commissioner, supra; Dunn v. Commissioner,
70 T.C. 715, 720 (1978), affd. 615 F.2d 578 (2d Cir. 1980).
Petitioners contend that they entered into the special
education activity with the expectation of making a profit.
Respondent contends that petitioners did not have the requisite
profit motive. To make our determination, we address the nine
factors found in section 1.183-2(b), Income Tax Regs.
1. Manner in Which Petitioners Carried On the Special
Education Activity
The fact that the taxpayer carries on the activity in a
businesslike manner and maintains complete and accurate books and
records may indicate that the activity is engaged in for profit.
Sec. 1.183-2(b)(1), Income Tax Regs.; Elliot v. Commissioner, 90
T.C. 960, 972 (1988); Engdahl v. Commissioner, 72 T.C. 659, 666
(1979). Petitioners introduced evidence of checks issued to
teachers and testified that they were required to provide expense
reports in order to receive funding from BUSD and Regional
Center. Respondent concedes that petitioners kept adequate
records.
When the taxpayer conducts the activity in a manner
substantially similar to other activities of the same nature
which are profitable, a profit motive may be indicated. Sec.
1.183-2(b)(1), Income Tax Regs.; Engdahl v. Commissioner, supra.
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