- 13 -
also for all other disallowed expenses related to her interior
design and equestrian activities.
OPINION
Section 183 restricts taxpayers from deducting losses from
an activity that is not “engaged in for profit”. Sec. 183(a).
An activity is engaged in for profit if the taxpayer entertained
an actual and honest profit objective in engaging in the
activity. 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. The taxpayer’s expectation of
profit must be in good faith. Allen v. Commissioner, 72 T.C. 28,
33 (1979) (citing sec. 1.183-2(a), Income Tax Regs.).
I. Burden of Proof
Petitioner argues that under section 7491(a), the burden of
proof has shifted to respondent. Conversely, respondent contends
the burden has not shifted because petitioner was not cooperative
within the meaning of section 7491(a), and because petitioner
failed to introduce credible evidence necessary for the burden to
shift. It is unnecessary for us to address the parties’
disagreements and to determine whether the burden of proof has
shifted because the outcome of this case is determined on the
preponderance of the evidence after trial and is unaffected by
section 7491. Estate of Bongard v. Commissioner, 124 T.C. 95
(2005) (citing Blodgett v. Commissioner, 394 F.3d 1030, 1035 (8th
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: November 10, 2007