Paula L. Wilson - Page 6

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          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 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, that are earned; (8) the              
          financial status of the taxpayer; and (9) the elements of                   
          personal pleasure or recreation involved in the activity.                   
               Having considered the factors listed in section 1.183-2(b),            
          Income Tax Regs., we hold that petitioners actually and honestly            
          intended to make a profit in the activity.  Consequently, section           
          183 does not limit the deductions claimed by petitioners with               
          respect to the activity.2                                                   
               Respondent contends that because petitioners have incurred             
          losses relating to the activity in each year, they did not have             
          the requisite profit objective.  To the contrary, petitioners               
          honestly and actually believed that they would recoup their                 

               2  Pursuant to sec. 7491(a), petitioners have the burden of            
          proof unless they introduce credible evidence relating to the               
          issue that would shift the burden to respondent.  See Rule                  
          142(a).  Our conclusions, however, are based on a preponderance             
          of the evidence, and thus the allocation of the burden of proof             
          is immaterial.  See Estate of Bongard v. Commissioner, 124 T.C.             
          95, 111 (2005).                                                             

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