Tracey L. Topping - Page 13




                                       - 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