NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_____________ No. 15

- 2196

_____________ RAYMOND PRICE, III; LYNN M. PRICE, Appellants

v. COMMISSIONER OF INTERNAL REVENUE

_____________ On Appeal from the United States Tax Court Nos. 1:13

- 4301; 1:13

- 8470 Submitted Pursuant to Third Circuit L.A.R. 34.1(a)

March 3, 2016 Before: McKEE, Chief Judge, SMITH, and HARDIMAN, Circuit Judges (Filed: March 7, 2016 )

_____________________ OPINION 

_____________________ SMITH, Circuit Judge. In a comprehensive memorandum opinion dated December 16, 2014, the

 This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does not constitute binding precedent.2

United State s Tax Court upheld, as explained therein, the tax deficiencies determined by the Commissioner of the Internal Revenue Service for taxable years 2009 through 2011 against appellants

. This timely appeal followed. 1 Appellants contend that the Tax Court erre d in finding (1) that their horse farm and automobile dealership undertakings were not a single activity, and (2) that the
horse farm undertaking was not conducted for profit. We will affirm for the

reasons stated below and for the reasons articulated by the Tax Court in its December 16, 2014 , memorandum opinion. “While we conduct plenary review of the Tax Court’s legal conclusions, we review its factual findings, including its ultimate finding as to the economic substance of a transaction, for clear erro r.” Crispin v. Comm’r , 708 F.3d 507, 514 (3d Cir. 2013) (quoting ACM P’ship v. Comm’r , 157 F.3d 231, 245 (3d Cir. 1998)). “The Commissioner’s deficiency determination is entitled to a presumption of correctness and . . . the burden of production as well as the ultimate burden of persuasion is placed on the taxpayer.” Id. (quoting Anastasato v. Comm’r , 794 F.2d 884, 887 (3d Cir. 1986)). The taxpayer must “prov[e] entitlement to a claimed deduction by a preponderance of the evidence.” Blodgett v. Comm’r , 394 F.3d 1030, 1035 (8th Cir. 2005 ) ; Tax Court Rule 142(a). This burden may shift

1 The Tax Court had jurisdiction pursuant to I.R.C. § § 6213(a) , 6214, and 7442. We have jurisdiction o ver final orders of the Tax Court pursuant to I.R.C. § 7482(a).3

back to the Commissioner if the taxpayer introduces credible evidence with respect to any relevant factual issue and meets other conditions, including maintaining required recor ds. I.R.C . § 7491(a); Blodgett , 394 F.3d at 1035. Treasury Regulation 1.183

- 1(d)(1) states that “[g]enerally, the Commissioner will accept the characterization by the taxpayer of several undertakings either as a single activity or as separate acti vities.” Such deference to the taxpayer will not be given, however, “when it appears t hat his characterization is artificial and cannot be reasonably supported under the facts and circumstances of the case.” Id. The regulation provides several factors t o be considered in determining whether two undertakings are part of the same activity. As a general rule, “all the facts and circumstances of the case must be taken into account.” Id. However, “the most significant facts and circumstances in making this determination are the degree of organizational and economic interrelationship of various undertakings, the business purpose which is (or might be) served by carrying on the various undertakings separately or together in a trade or business or in an invest ment setting, and the similarity of various undertakings.” Id. In addition to the factors explicitly listed in Treasury Regulation 1.183

- 1(d)(1) , courts consider other factors in determining whether the taxpayer’s
characterization is reasonable. These factors are:4 (a) [w]hether the undertakings are conducted at the same place; (b) whether the undertakings were part of the taxpayer’s efforts to find sources of revenue from his or her land; (c) whether the undertakings were formed as separate businesses ; (d) whether one undertaking benefited from the other; (e) whether the taxpayer used one undertaking to advertise the other; (f) the degree to which the undertakings shared management; (g) the degree to which one caretaker oversaw the assets of both under takings; (h) whether the taxpayer used the same accountant for the undertakings; and (i) the degree to which the undertakings sh ared books or records. Mitchell v. Comm’r , 92 T.C.M. (CCH) 17, *4 (2006). The Tax Court thoroughly analyzed both the regulatio n’s enumerated factors and the Mitchell factors, and its determination that appellants’ horse farm and automobile dealership undertakings were not part of the same activity is not clear ly erron eous . Appellants have also failed to show that the horse farm undertaking was conducted w ith a profit motive. Treasury R egulation 1.183

- 2(b) enumerates nine

non - exclusive factors to be considered in determining whether an activity is conducted for profit: (1) the manner in which the taxpayer carries on the activity ; (2) the expertise of the taxpayer or his advisors; (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 losses with respect to the activity; (7) the amount of occasional profits, if any, which were earned; (8) the financial status of the taxpayer; and (9) elements of personal5

ple asure or recreation. Again, “ [ n]o one factor is determinative in making this determination,” and all facts and circumstances are to be taken into account. 26 C.F.R. § 1.183

- 2(b). Again, the Tax Court th oroughly analyzed these factors and did not commit clear error in determining that the horse farm undertaking was not conducted with a profit motive. For the reasons stated herein, and for the reasons stated in the Tax Court’s December 16, 2014 , memorandum opinion, we will affirm the order of the Tax
Co urt.