Dreicer v. Commissioner

Maurice Dreicer (plaintiff), who lived comfortably off a family trust, spent roughly $25,000 a year traveling abroad, which he genuinely enjoyed, while claiming he intended to profit from writing books and making media appearances about his travels. His one published book was a commercial failure. When Dreicer deducted his 1972 and 1973 travel costs as business losses, the IRS Commissioner (defendant) disallowed the deductions, and the Tax Court initially agreed that Dreicer lacked a bona fide expectation of profit. On appeal, the D.C. Circuit held the correct legal standard was whether Dreicer had a profit objective, not a bona fide expectation of profit, and remanded for the Tax Court to apply that standard.