The Tax Court treated SelfChanger software work as a real profit-seeking venture, treated most Lincolnville land-development work as profit-motivated, and treated the “Leaf-Cutter” mulching Schedule C as a non-profit hobby loss.
Holding
The Court held that the Sullivans engaged in Traders Abacus’s software development activity for profit under §183 for 2017–2019. The Court also held they engaged in Traders Abacus’s home construction and land development activity for profit only as to the 47.71-acre parcel, not the 3.89-acre parcel. The Court held they did not engage in the Leaf-Cutter mulching activity for profit in 2019. The Court allowed deductions to the extent later substantiated, and it allocated 75% of home construction expenses to the profit-motivated parcel and 25% to the personal-use parcel.
Why It Matters
§183 profit motive fights often turn on boring facts. Books, records, business plans, and credible pivots still matter more than vibes.
Real estate development can qualify as pr…
