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fact, conducted for profit as evidenced by other factors. Sec.
1.183-2(b)(9), Income Tax Regs.
While petitioners testified that they hoped to make a
profit, petitioners also testified that the purpose of their
special education activity was to provide GJR, their son, with an
education that met his needs as an autistic child. Taking into
consideration the factors discussed above, we find that
petitioners’ predominate motive for undertaking the special
education activity was personal. These facts weigh in favor of
respondent.
In summary, the only factor indicating a profit motive is
petitioners’ expertise in dissimilar activities. This factor is
heavily outweighed by the manner in which petitioners conducted
the activity, the time and effort they expended, the lack of
occasional profits, petitioners’ financial status, and their
personal motive. We hold that petitioners did not engage in the
special education activity for profit during the years in issue
within the meaning of section 183.
B. Section 6662(a) Accuracy-Related Penalty
The second issue is whether petitioners are liable for an
accuracy-related penalty. Respondent determined that petitioners
were liable for a penalty of $42 under section 6662(a) for 2000
based on petitioners’ omission of their State income tax refund
from their return for 2000.
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Last modified: May 25, 2011