- 23 -
1027 (10th Cir. 1994), affg. Krause v. Commissioner, 99 T.C. 132
(1992); Cannon v. Commissioner, 949 F.2d 345, 350 (10th Cir.
1991), affg. T.C. Memo. 1990-148;16 Oswandel v. Commissioner, T.C.
Memo. 2007-183. Under the standard applied by the Court of
Appeals for the Tenth Circuit, petitioners must prove that the
dominant or primary objective of their exotic animal breeding
activity was to earn a profit.
Section 1.183-2(b), Income Tax Regs., sets forth a
nonexclusive list of factors to be considered in determining
whether a taxpayer has the requisite profit objective. 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 other similar or dissimilar activities; (6) the
taxpayer’s history of income or loss with respect to the
activity; (7) the amount of occasional profits, if any, which are
earned; (8) the financial status of the taxpayer; and (9)
16In both Hildebrand v. Commissioner, 28 F.2d 1024, 1027
(10th Cir. 1994), affg. Krause v. Commissioner, 99 T.C. 132
(1992), and Cannon v. Commissioner, 949 F.2d 345, 350 (10th Cir.
1991), affg. T.C. Memo. 1990-148, the Court of Appeals for the
Tenth Circuit applied the dominant or primary objective test at
the partnership level in analyzing whether a partnership was
engaged in an activity for profit under sec. 183.
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
Last modified: March 27, 2008