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2. The Expertise of the Taxpayer or His Advisers
Preparation for an activity by extensive study of its
accepted business, economic, and scientific practices, or
consultation with those who are expert therein, may indicate a
profit objective. Engdahl v. Commissioner, supra at 668; sec.
1.183-2(b)(2), Income Tax Regs. Efforts to gain experience and a
willingness to follow expert advice may also indicate a profit
objective. Dworshak v. Commissioner, T.C. Memo. 2004-249;
Lundquist v. Commissioner, T.C. Memo. 1999-83, affd. 211 F.3d 600
(11th Cir. 2000).
Petitioners attended numerous RTP seminars and conventions.
Mr. Sears testified that attendees sometimes discussed revenue
rulings or other aspects of the tax law, but that “conventions in
network marketing are more for training in doing the business”
and to help “build enthusiasm” for the activity. Mr. Sears did
not explain what he meant by “training in doing the business”.
Although petitioners may have gained expertise relevant to the
activity from the RTP-sponsored events they attended, the
substance of the seminars and conventions is unclear. Without
more information, this factor neither supports nor undercuts the
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Last modified: May 25, 2011