Deductible business or investment expenses must be related to a profit-motivated activity. a. What are the factors used in determining whether an activity is profit-motivated? b. Why are those factors so important in making this determination? A. The history of income or losses with respect to the activity The amount of occasional profits C. The time and effort expended by the taxpayer carrying on the activity ND The financial status of the taxpayer E. The taxpayer uses the accrual method OF. The item meets the all-events test during the year. O G. The expenses are reasonable H. The expertise of the taxpayer or his advisor II. Whether the assets used are expected to appreciate in value J. Whether the activity is conducted in a business-like manner OK. Any elements of personal pleasure or recreation, which the activity might involve DL The taxpayer's success in carrying on other similar activities M. The improvements increase the value of the property b. Why are these factors so important in making this determination? O A. Whether an activity is profit-motivated or not depends upon the intent of the taxpayer. These factors provide an objective way of determining a taxpayer's intent. Losses incurred in a profit-motivated activity are not deductible, whereas losses incurred in a personal activity are generally deductible. Thus, external indications of a taxpayer's motive or intent are extremely important in determining the deductibility of an expenditure. OB. Whether an activity is profit-motivated or not depends upon the intent of the taxpayer. These factors provide an objective way of determining a taxpayer's intent. Capital losses incurred in a profit-motivated activity are not deductible, wherees capital losses incurred in a personal activity are generally deductible. Thus, external indications of a texpayer's motive or intent are extremely important in determining the deductibility of an expenditure