-423-
that Kanter’s prior experience with similar investments is a
relevant factor in determining whether GLS Associates had an
actual and honest profit objective, that factor alone is far from
dispositive. See sec. 1.183-2(b), Income Tax Regs. Petitioners
failed to establish that: (1) GLS Associates was engaged in an
activity for profit; (2) GLS Associates incurred and paid the
claimed investment interest expense; and (3) even assuming the
investment interest expense was incurred, that such interest
expense is deductible. Consequently, the Court sustains
respondent’s determination on this issue. See Rule 142(a).
Issue XVIII. Whether the Kanters Are Entitled to an Investment
Tax Credit Carryover for 1978 (STJ report at 169-
170)164
On their 1978 income tax return, the Kanters claimed a
$120,566 investment tax credit carryover. Respondent disallowed
the tax credit in the notice of deficiency.
OPINION
A. The Parties’ Arguments
Petitioners contend that their entitlement to the 1978
investment tax credit carryover is purely “computational” under
Rule 155. Petitioners assert, in pertinent part:
The issue of whether Kanter is entitled to a carryover
of investment tax credit from his 1977 year to his 1978
year is purely computational. The resolution of this
164 The Court’s disposition of this issue represents in
large measure a wholesale adoption of the recommended findings of
fact and conclusions of law set forth in the STJ report.
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