-8-
taxpayer is carrying on a trade or business depends on the facts
and circumstances.4 Id. at 36.
Respondent has conceded that petitioner’s gambling activity
was conducted with the required continuity and regularity during
2003. The parties dispute, however, whether petitioner’s primary
purpose for engaging in the activity was to earn a profit. See
id.; Miller v. Commissioner, T.C. Memo. 1998-463, affd. without
published opinion 208 F.3d 214 (6th Cir. 2000).
We examine whether the taxpayer engaged in the activity with
the actual and honest objective of making a profit. See Evans v.
Commissioner, 908 F.2d 369, 373 (8th Cir. 1990), revg. T.C. Memo.
1988-468; Keanini v. Commissioner, 94 T.C. 41, 46 (1990); Dreicer
v. Commissioner, 78 T.C. 642, 645 (1982), affd. without opinion
702 F.2d 1205 (D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs.
While a taxpayer’s expectation of profit need not be reasonable,
there must be a good faith objective of making a profit. Allen
v. Commissioner, 72 T.C. 28, 33 (1979); sec. 1.183-2(a), Income
Tax Regs. We give greater weight to objective facts than to a
taxpayer’s statements of intent. Dreicer v. Commissioner, supra
at 645; sec. 1.183-2(a), Income Tax Regs.
4At trial, we denied petitioner’s motion to shift the burden
of proof under sec. 7491 because the outcome of this case is
determined on the preponderance of the evidence, making it
unnecessary to determine who has the burden of proof. See
Topping v. Commissioner, T.C. Memo. 2007-92. The Court invited
the parties to address this issue on brief. We have carefully
reviewed the parties’ arguments on brief and stand by our ruling
denying petitioner’s motion to shift the burden of proof to
respondent. Instead, we shall determine the outcome of this case
on the preponderance of the evidence. See id.
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