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or for the management, conservation, or maintenance of property
held for the production of income.
Factors to be considered in determining whether an activity
is engaged in for profit include: (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
losses 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) the elements of personal pleasure or
recreation. Golanty v. Commissioner, 72 T.C. 411, 426 (1979),
affd. without published opinion 647 F.2d 170 (9th Cir. 1981);
sec. 1.183-2(b), Income Tax Regs. No single factor or group of
factors is determinative. Golanty v. Commissioner, supra at 426.
A final determination is made only after a consideration of all
of the relevant facts and circumstances.
With respect to the taxpayer’s expectation of making a
profit, this expectation need not be reasonable. Dreicer v.
Commissioner, 78 T.C. 642, 645 (1982), affd. without opinion 702
F.2d 1205 (D.C. Cir. 1983). However, greater weight is given to
objective facts rather than to a taxpayer’s self-serving
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Last modified: November 10, 2007