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1997 $ 24,785
1998 44,752
1999 41,020
2000 41,492 (year at issue)
2001 44,225 (year at issue)
2002 19,667 (not before the Court)
Total losses $215,941
The profits or losses for the years prior to 1997 were not
presented at trial. It appears that the years 2000 and 2001 are
the only years in which this activity has been called into
question by the IRS. Petitioners acknowledged at trial that they
are no longer reporting income and expenses with respect to this
activity on their Federal income tax returns.
Petitioners’ brief focuses exclusively on the argument that
the losses they incurred for the 2 years at issue came from an
activity engaged in for profit, and that, under section 183, they
are entitled to deductions for the expenses incurred for the 2
years in question. Respondent, however, focuses the issue as
follows:
Petitioners’ opening brief suffers from one serious
logical fallacy. The basic premise of the brief is that Mr.
and Mrs. Gonzalez operated an oil field equipment
exportation business during the years 2000 and 2001.
Petitioners then attempt to explain how its operation
comported with the factors the Court looks to to determine
whether it was an activity entered into for profit.
Respondent asserts that this approach ignores a much more
basic question; was there actually an activity.
Petitioners claim that they operated their business in
the United States, and they also maintained a presence in
Colombia. Respondent asserts that there is no evidence that
there was ever a business. Petitioners reported losses from
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Last modified: May 25, 2011