Tax Research Paper Iii

1694 words - 7 pages

Tax Research Assignment – Project III

To: Jennifer Woods
From: L. Bromfield
Date: July 8th, 2012
Re: Expense deduction for AGI against winnings of prize money and sponsorship income.

You have been employed for the last six years as a manager by Ski USA, a distributor of ski equipment and boots.
In the past two years you have participated in over 50 races annually as a professional bicycle racer and incurred annual expenses that exceeded your annual income.
You worked lighter schedule during the racing season by utilizing your vacation time and has been ranked in two events by the National Biking Association.
You have worn full-face helmet, chest protector, knee ...view middle of the document...

2d 724, 726 (9th Cir.1986), affg. Lahr v. Commissioner, T.C. Memo.1984-472.
The expectation of profit need not have been reasonable, but it must be bona fide. See 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. Whether the requisite profit objective exists is determined by looking to all the surrounding facts and circumstances. Golanty v. Commissioner, supra at 426; sec. 1.183-2(b), Income Tax Regs. Greater weight is given to objective facts than to a taxpayer's mere after-the-fact statement of intent. Indep. Elec. Supply, Inc. v. Commissioner, supra; Thomas v. Commissioner, 84 T.C. 1244, 1269 (1985), affd. 792 F.2d 1256 (4th Cir.1986); sec. 1.183-2(a), Income Tax Regs. Petitioners bear the burden of proof. Rule 142(a).
Section 1.183-2(b), Income Tax Regs., provides a list of factors to be considered in the evaluation of a taxpayer's profit objective: (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 loss with respect to the activity; (7) the amount of occasional profits, if any, from the activity; (8) the financial status of the taxpayer; and (9) elements of personal pleasure or recreation. This list is nonexclusive, and the number of factors for or against the taxpayer is not necessarily determinative but rather all facts and circumstances must be taken into account, and more weight may be given to some factors than to others. See sec. 1.183-2(b), Income Tax Regs.; cf. Dunn v. Commissioner, 70 T.C. 715, 720 (1978), affd. 615 F.2d 578 (2d Cir.1980).
The facts submitted here establishes that your primary, predominant, or principal motive for engaging in the bicycle racing activity was not for profit.
A. Manner in Which the Activity Is Conducted
While you did keep records, they did not your intent of actually conducting a business therefore making a profit was not your sole intent.
Even though you had records reporting substantial losses, you never developed a written business plan or made a budget. Your participation in multiple races over the past two years earning sponsorship income and prize money and does not constitute a business plan.
B. Expertise of Petitioners and Their Advisers
You have been ranked in two events by the National Biking Association and had indicated that you have extensive experience in bicycle racing by training on a daily basis however you have also demonstrated that your main source of income was your full time job as a manager at Ski USA. Not once have you mentioned your intent to enter bicycle racing as a means earning income.
C. Time and Effort Expended by...

Other Essays Like Tax Research Paper Iii

Acc 555 Assignment 2

1926 words - 8 pages Tax Deductible Losses Tax Deductible Losses Congress has provided taxpayers with the ability to reduce their taxable income by claiming tax-deductible losses for the past several decades. The variety of losses that could be claimed has changed over time in response to wars, economic conditions, political pressures, and legislative changes. This paper will examine the allowable loss deductions, the impact on taxpayers, and the effects

Term Paper

741 words - 3 pages your system meets each of the objectives you defined for it. b) (10 points) A detailed bill of materials of every item to be included in the system, including, but not limited to: i) Description of item ii) Cost, showing price and tax and shipping, if any. iii) Source (vendor, store, etc.) Dealer quotation sheets and advertisements do NOT satisfy this requirement! You may use the format below. There is an Excel 97

Value Added Tax

3007 words - 13 pages begin the slow hike uphill to conquer the massive hole of debt. Is the income tax or consumption based tax best for Americans? This research paper may not answer the United States economic problems, but will define the various taxes and how they may benefit American’s current economic instability. Literature Review Mr. James R. White is the Director of Strategic Issues within the United States Government Accountability Office. The

Transfer Pricing

3296 words - 14 pages structures allow the company to reduce its overall tax burden. One such strategy is discussed in this paper. Transfer pricing allows the company to price the inter-company transactions. Transfer pricing simplifies the accounting of transactions that take place between affiliated or related entities. Companies have freedom in valuing inter-company transactions. But, if strategically implemented, this strategy allows the company to save taxes and

Thesis Paper Outline

710 words - 3 pages statement of your position; your answer to your research question c. Expanded thesis statement: A brief listing of the major points that you will make in your paper, in the order in which you will make them II. Arguments: Each of your main arguments can either argue a point that supports your position, or argue against something you believe is wrong. This is a lengthy paper, so ideally you will have more than three arguments to

The Optimal Capital Structure According to the Static Trade- Off Theory

2581 words - 11 pages . The Static Trade-off model As the debt equity ratio increases, there is a trade off between the interest tax shield and bankruptcy, causing an optimum capital structure. Below graph shows the relationship. Page |5 Research Paper - The Optimal Capital Structure According to the Static Trade- Off Theory Trade-Off theory of capital structure tells us that we have to include debt in our capital structure only that limit or degree where we

Business Management

1082 words - 5 pages lines: i) ii) iii) iv) How to develop a good research idea How to write and publish a paper, How to make other people read your work and comment on it How to interact with other researchers etc. Make a list (with comments) of what you think are the best advice you obtained from these papers. 2: Writing research papers and the critical assessment of research Dates: 18, 25 November Writing and Presenting work in English How to structure a

Financial Report Sample

1529 words - 7 pages .) A. B. C. D. $6.00 $7.20 $7.52 $6.90 13. The cost of capital for a firm, rWACC, in a tax-free environment is: I) equal to the market value weighted average of the return on equity and the return on debt; II) equal to rA, the rate of return for that business risk class; III) equal to the overall rate of return required on the levered firm A. B. C. D. I and II only II and III only All of the above None of the above 14


730 words - 3 pages ). American government [Electronic version]. San Diego, CA: Bridgepoint Education, Inc. U.S. Const. art. I, § 3. U.S. Const. amend. VIIII. U.S. Government Records, Retrieved 29 February 2016, source, | I see all my cites of being fair and honest for my research. The U.S Const. maybe old and some of it outdated but it is the law of the land and is what makes us all Americas. I do however want to research other papers in the Ashford Library to base my paper off of. I am currently working on my final paper for week five and hope to have it submitted for review in a few days.


4330 words - 18 pages sheet will be graded. C. The time allotted for an exam includes the time required to “bubble-in” your Scantron answer sheets. It is cheating to take extra time to bubble in the answer sheet after time is up for the exam. 2. Answers to Problems should be recorded on the exam where indicated. Show your work legibly in the space provided or attach scratch paper. 3. Cell phones, books, notes, PDAs and programmable calculators are NOT

Depreciation Methods

571 words - 3 pages Michael Orfanelli Research Paper Accounting December 2, 2008 Use of Accelerated Depreciation Methods Allows Shifting of Income How to begin a conclusion on a project I don’t completely understand. I have done my hunting on the computer, local libraries, even my boss’s son who is an accountant. I have tried to understand the meaning behind the question being asked, but all the information comes up as formulas to use in

Related Papers

Rick Beam Tax Research Paper

1138 words - 5 pages Tax Research Case 2 September 30,2013 I. FACTS: Rick Beam has been an independent sales representative for various textile manufacturers for many years. His products consist of soft goods such as tablecloths, curtains, and drapes. Rick’s customers are clothing store chains, department stores, and smaller specialty stores. The employees of these companies who are responsible for purchasing merchandise are known as the buyers. These

Tax Evasion Essay

5284 words - 22 pages Taxpayers’ willingness to pay taxes differs widely across the world. It cannot be viewed as simply depending on the tax burden. Rather, empirical research indicates that taxpayers throughout the world pay more taxes than can be explained by even the highest feasible levels of auditing, penalties and risk-aversion (Alm et al. 1992, 2007). These high levels of tax compliance result from the tax morale of society that fosters self-enforcement of tax

The Estate Tax Should Be Controlled

3633 words - 15 pages thresholds have exempted many Americans from having to worry about filing for estate tax. Yet, there are state estate taxes that can be particularly burdensome as Forbes magazine article puts it in its article “Where Not To Die In 2013”. The context of this research document is accounting by nature, and it will delve into a discussion concerning both federal and state estate tax laws in the United States. After an analysis of the implications

Bangladesh Budget Analysis Fy13 14

3839 words - 16 pages changed i.e. I. Investment by firms or individuals will be allowed 15 percent tax rebate on 30 percent of income. II. The tax rebate ceiling in case of individual investors will be increased to 30 percent from existing 20 percent. III. The ceiling for tax rebate on investment for the individual taxpayers in certain cases has been raised to BDT 15 million from BDT 10 million. Chapter 3 Revenue analysis