To be engaged in a trade or business the taxpayer must have
a good faith expectation of profit although that expectation need
(7th Cir. 1987), affg. T.C. Memo. 1985-523; Golanty v.
Commissioner, 72 T.C. 411, 425-426 (1979), affd. without
stated by the Supreme Court in Commissioner v. Groetzinger, 480
U.S. 23, 35 (1987):
not every income-producing and profit-making endeavor constitutes a trade or business. * * * to be engaged in a trade or business, the taxpayer must be involved in the activity with continuity and regularity and * * * the taxpayer’s primary purpose for engaging in the activity must be for income or profit. * * *
Although an individual who is engaged in the business of selling
real estate to customers may be characterized as a real estate
dealer, an individual who holds real estate for investment or
speculation, and receives rentals therefrom, is not a real estate
Petitioner asserts that he and Mrs. Wood were real estate
dealers and that the properties constituted inventory held for
sale to customers in the ordinary course of the taxpayer’s
business or for another purpose is a question of fact, and each
States, 619 F.2d 1150, 1153 (6th Cir. 1980); Cottle v.
Commissioner, 89 T.C. 467, 486-487 (1987).