If an Activity Produces a Profit for at Least Two

question 79

True/False

If an activity produces a profit for at least two years during a consecutive five-year period,the burden of proof shifts to the IRS to show that the activity is not profit-motivated.

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Definitions:

Political Appointment System

A system where government officials are appointed based on their political affiliations and loyalty rather than merit or competitive examination.

Career Civil Servants System

A system employing individuals who work for the government and are selected based on merit rather than appointed or elected, providing continuity within the bureaucracy.

Pendleton Act

An 1883 U.S. federal law that established that positions within the federal government should be awarded based on merit instead of political affiliation.

Spoils System

The spoils system is a political practice where a political party, after winning an election, gives government jobs to its supporters, friends, and relatives as a reward for working toward victory, rather than for their expertise.