cases out there virtually all focus on the nine regulatory factors which are designed to smoke out a taxpayers real motive profit or pleasure here only to those factors favored the commissioner but it carried the day most of my career has been devoted to these forced cases no party has with only two factors i wasn't involved in trial but i did as buys that that was not enough with the proper deference given a trial courts we needed more is there any weighting of factors or they considered or are all nine considered to be of identical significance no your honor the regulations specifically say that no one to be given more weight than another they even go outside and say you can leave the other factor in other words they're completely useless if there are no way didn't get one can outwait and if you can just of business people get a lot of pleasure out of their business make a lot of money their big shots and song does does that could could could a profitable business  could have could have a profitable business be denied the deductions on the grounds that the that the owner really loved what he was doing he loved it more than love the money  the if they make if they make money that no matter how even though it's sort of an access they do it for fun but they're lucky and they make money they still get their tax deductions but if there activity horse racing for example or competitive gardening and you do this for pleasure you don't have any business expenses you've just got expenses and presumably you can't deduct them that's correct do you  that the taxpayer claims them as business expenses the government challenges it doesn't matter whether you make a profit or a loss if you're entering into this is a deal that rather than as a to make a profit you can't deduct the whether you make rate the first argument that donald trump said you know i've made that is of dollars but really the only reason i do this i really love to see my name out of the building and i mean look at he that they had the commissioner and in the court said that he could escape he thought it was a hazardous to your help to own a nightclub so he got out of the management and they claim that all he had to do is walk across the road to his farm to gain relief they say that's a pleasure element i think that's pretty bizarre and it was only raised the first time  a motion to reconsider in the main decision the court didn't follow that they in fact said that he ran dancers  cellphone management unquote so the two are rather contradictory and there's no evidence at all is it that robert source family members even rode horses but he actually spent a lot of time at the track or elsewhere socializing with the owners while the court held that factor in favor of in favor of the taxpayer right  primarily for applause now we countered with three arguments with solid evidence that even the commissioner in a corporate greed will first in two thousand and five mr roberts bought a new farm for a million dollars he improved it with a half million dollars a horse related improvements and they agree with that but they say his profit motive didn't come until he began operating it in two thousand and seven why no profit motive when he spent a million and i have dollars second well before two thousand and seven he was on the quote ground floor that reports words of lobbying for a slot machine bill to help horse owners the court and a commissioner jury but cite profit motive only occurred in early two thousand and seven when the bill actually pants so all that groundwork without profit motive when was the slot machine it was passed in early two thousand and seven but he had worked on it for two or three years before that and finally we showed that mr roberts hard work training at the racetrack before two thousand and seven mccourt fully agreed but it gave it no weight and on the placer factor hard physical in the neck or shin decision so there it is three arguments without evidence or authority and are three with undisputed evidence which brings us finally to your a lack of profit motive but only one of the nine factors favored that taxpayer so you are correct this is the flip side if you find only one factor for the commissioner we hope you reverse and on planes or that court didn't discuss mere availability it named the pleasure the taxpayers lover horses but it balance that against her hard farm work and found the factor neutral your prayer cord had done have we wouldn't be here today but he did like horses if it had so no question in nine hundred ninety nine i think he had two horses so that presumably was for driving there that was a pleasure he certainly and well in fact when he left dancers he had open to other business and quit both of them because he didn't enjoy them where he's been in the horse racing business quite a while now so obviously he didn't joyce it plenty of cases of recognize that but they've never lifted that to the level of  deciding this personal pleasure issue you balance things and here that's the only factor in the government's favor we've got a lot of factors that surface ocean so all we ask is that you balance mr robert profit motive in two thousand and five and six shown by those purchasing the farm and improving it per million and i have shown by his lobbying efforts and shown by his hard work jackson against the commissioner tax court case saying suffering has never been a prerequisite to taking did not dissidents in fact as you say plays are in businesses usually the region  and so far as we know according to mr mitchell prego he's been taking them ever since now what happened is is it your idea that he went into this for fun for pleasure and then suddenly in two find in the tax court ended up finding the fact that sometime between two thousand and six and two thousand and seven roberts has gold changed the tax court found that he's the billable tools change the bigger farm was better positioned to make money itself but where can i find a finding that his go the court decided that and the record showed that they were substantial developments in two thousand he said yes yes another great fallacy businesses don't start off profitable they start nothing is more common then for a new business to have years of struggle before it becomes profitable it's still in this instance i think in of commercial activities retail businesses and if this is someone were given the duty he's racing and selling these forces he's getting it may or may not be making a profit but i want to come back to my question camp where can i find a finding by the tax court that his goal changed as opposed to finding that the tools he had available to him changed i take it from your non answer that there isn't any such fine that is which mode of predominated exactly most weeks then it's a question of which motive predominated so i look for a finding that in two thousand and five and two thousand and six the taxpayers motive was to enjoy himself and then after he bought the bigger farm his motive was to make a profit that implies a finding that his goal changed and i couldn't find that now maybe i didn't read it properly that's why i'm asking you this question on the morrisville property he purchased that property for investment purposes he became interested in horses because it had  all of a sudden that's all there was there was always pleasure and pride in horse racing there's always some element of pleasure in sport and pursuit of the prize money the question is this a business or is this a person a hobby a pursuit a sideline that somebody who can afford to race horses is doing this for fun is costing money and yes there's just because there's prize money there doesn't turn into a trade or business the tax court is responsible for deciding when the scales tip from her merrily personal to primarily for business it would grow it doesn't start at its full level of about right so if he starts small in two thousand and five gets to a bigger in two thousand and six two thousand and seven it gets bigger that doesn't imply any change in his true motives he was pursuing horse racing as a sport at that time he developed his knowledge and expertise to the point that he would want to create a professional grade training d profit is the this is dominant name he knew that the morris tree property was not suitable for running a profitable horse racing operation and he knew that he could not construct a suitable training for this horse and that awkward because he's only going to show off and he discovers that his facility for his business is too small so he gets something bigger that's entirely consistent with zero always been thinking this is my new business i'm through with the restaurants and so on now i'm going to go into horse racing start small  by two thousand and seven it's a larger operation that doesn't have anything to that doesn't give you any clue as to what he was thinking back in two thousand  that's entirely consistent with a growing a business for business reasons and particularly when you look at all five when he decides he wants a new training facility the only reason that doesn't go t government right and that's he then has to go get the bigger parcel finder of fact could have found either way on any i mean for these years but the fact of the matter is the tax court looked at it and said he would got interested in horses as a personal matter way back in ninety eight and his he grew his knowledge and expertise he reached the point in two thousand and five where he said ok to make this profitable the facility hired a system but i mean all of this was preparation for it and there's no indication this is a start up situation but it's all in preparation for opening of the mor where the court said that's where i'm going to draw the line because the start of personnel got to the point where he wanted to get this idea he wanted to make a profitable business out of this he knew he couldn't do it so he sold that property  that's assuming that horseracing is a commercial trade or business i would submit that it's a combination i submit that people engage in horse racing for recreational purposes so take of the trade or business level a lot of others this man of course a lot of business people are motivated by more than desire for money i think to be very interesting challenge and so on i want to be i don't always  say one of the problems here this regulation with this nine elements this is ridiculous how could any person know what the inter how the internal revenue service attacked or was going to wait these how would you lay know what what the what and when he was going to do with all of this well mainly i think when i'm in an effort expended by the taxpayer what is their name if he's if he says business he'll spend a lot of time for its pleasure he'll spend a lot of time so what does that fact what what is the significance of that they're just guidelines no tell me what is the significance of whether you're effort he spent pleasure people spend a lot of time in africa you know now how much time there was no effort to measure to divide up his time between business time and pleasure time derived from the business is nothing like that in the record there are people who spend a lot of time and there's nothing like that in the record there's no dispute that it's there  nothing about how the time divided up which was more time more time on the business more time on the pleasure nothing in this record and what i particularly don't understand how an advance someone looking at the nine factors would have any idea how these factors were going to be weighted by the internal revenue service well i think the most common thing reality you have another one about expertise how do you weigh expertise against time suppose he spends loads of time on the business and not much time on the there's no it's not nobody said it was easy but the system is not it isn't easy it's total nonsense there is no way don't wait these nine factors it's impossible  all the factors and said you're going to look at them until you go blind there is no way of weighting these factors they're too abstract and none of them and that none of them involve actual these factors or under the commissioner's view with thurgood marshall good doctors expenses from his income i don't think he would even claim to have had a profit motive if you don't ever that you don't claim to profit motive the know anybody who works for the well not deductible as a trade or business like what did they would be working on a salary i suppose i mean it would be another profit organization i mean that's a whole different i didn't ask whether the n e a c p excel at expenses i was asking didn't want to make a profit he wanted to change the world while i'm taxed on my salary i mean it's like you know i don't curse some expenses coming here to argue but i can't write it up for me it's it's just it's a kates zucker bird buffet i'm sure others they have said they're going to give away all their money and i'm going to give it to their kids it's all going to go to for charitable activity and does that mean that these two billion dollar businesses are not businesses because no you object is not is not making money for your for your business that's just that's not the object that's the means of achieving the personal satisfaction of being a great benefactor a profitable business doesn't it that one of the three doesn't come into play in the case or profitable business that's only where situation where people spend a lot of iraqi elements of personal pleasure recreation whatever sucker burger gaze on our buffet actually i think it's true what if they don't really care a lot about spend a lot of money on themselves care about that stuff it's the it's the personal pleasure of building some gigantic business and then using the enormous income of the we're talking about a situation where you're losing money overall then section one eighty three comes into play and it comes into play because if you ducting losses in activities well the first factor nine this elements of personal believe the analysis is different there because if it's a business then it's happened more likely that there is a profit motive when you get into sporting activities and things like that it's a more difficult analysis and here it's refer regardless of where what the record what the right what the regular asians value is it does say that the taxpayer can have other motives than profit secondly  can think of much better evidence for getting regulations much better evidence of profit motive in spending a million and i have dollars on a farm in worse improvements during one of these years the issue and third i thought you might be interested in the score card the next year in two thousand and seven the court found one factor in favor of the commissioner seven in favor of the tax