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during the taxable years in issue. See Rule 142(a); Welch v.
Helvering, supra.
Section 1.183-2(b), Income Tax Regs., contains a
nonexclusive list of factors to be used in determining whether an
activity is engaged in for profit. The factors are: (1) The
manner in which the taxpayer carries on the activity; (2) the
expertise of the taxpayer or his advisers; (3) the time and
effort expended by the taxpayer in carrying on the activity; (4)
the expectation that assets used in the activity may appreciate
in value; (5) the success of the taxpayer in carrying on similar
or dissimilar activities; (6) the history of income or losses
with respect to the activity; (7) the amount of occasional
profit, if any; (8) the financial status of the taxpayer; and (9)
any elements of personal pleasure or recreation. No single
factor, nor simple numerical majority of factors, is controlling.
See Cannon v. Commissioner, 949 F.2d 345, 350 (10th Cir. 1991),
affg. T.C. Memo. 1990-148.
The fact that the taxpayer carries on the activity in a
businesslike manner and maintains complete books and records may
indicate that the activity was engaged in for profit. Sec.
1.183-2(b)(1), Income Tax Regs. Changes in operating methods,
adoption of new techniques, or abandonment of unprofitable
methods in a manner consistent with an intent to improve
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Last modified: November 10, 2007