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engages in an activity with the primary purpose of making a
profit is a question of fact to be resolved based on all the
facts and circumstances in a particular case. Golanty v.
Commissioner, 72 T.C. 411, 426 (1979), affd. without published
opinion 647 F.2d 170 (9th Cir. 1981); sec. 1.183-2(a), Income Tax
Regs. While the focus of the test for whether a taxpayer engaged
in an activity with the intention of making a profit is on the
subjective intention of the taxpayer, greater weight is given to
the objective facts than is given to the taxpayer’s mere
statement of his intent. See Stasewich v. Commissioner, T.C.
Memo. 2001-30; sec. 1.183-2(a), Income Tax Regs.
Section 1.183-2(b), Income Tax Regs., provides a
nonexclusive list of relevant factors to be weighed when
considering whether a taxpayer engaged in an activity for profit.
No one factor is determinative of whether an activity is engaged
in for profit. Brannen v. Commissioner, 722 F.2d 695, 704 (11th
Cir. 1984), affg. 78 T.C. 471 (1982); Golanty v. Commissioner,
supra at 426; sec. 1.183-2(b), Income Tax Regs. The relevant
factors are: (1) The manner in which the taxpayer carried 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 the assets used in the
activity may appreciate in value; (5) the success of the taxpayer
in carrying on other activities for profit; (6) the taxpayer’s
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Last modified: November 10, 2007