On Schedule C attached to petitioners' 1984 Federal income tax return, petitioners claimed a $ 27,300 depreciation deduction and reported a $ 27,300 net loss with respect to petitioner's investment in the FoodSource program. Also, on Form 3468, Computation of Investment Credit, attached to their 1984 return, petitioners claimed a $ 218 investment tax credit with respect to petitioner's investment in the FoodSource program. Respondent disallowed the claimed depreciation deduction, investment tax credit, and loss.

OPINION

Issue 1. Validity of the Closing Agreement for 1984

Initially, we must determine whether the closing agreement entered into by petitioners and respondent in August 1989 precludes petitioners from claiming the disputed deduction, credit, 1996 Tax Ct. Memo LEXIS 179">*188 and loss for 1984. Petitioners contend that the closing agreement is applicable only to those years enumerated therein (namely, 1979, 1980, 1982, and 1983), and hence has no applicability to 1984. Respondent, on the other hand, contends that the closing agreement is applicable to all matters concerning petitioner's investment and participation in the FoodSource program.

Section 7121(a) authorizes the Secretary of the Treasury or his delegate to enter into written closing agreements with respect to the tax liability of any person for any taxable period. Such closing agreements are binding on the parties as to the matters agreed upon and may not be annulled, modified, set aside, or disregarded in any suit or proceeding unless there is a showing of fraud, malfeasance, or misrepresentation of a material fact. ⁸Sec. 7121(b); Rink v. Commissioner, 100 T.C. 319">100 T.C. 319, 100 T.C. 319">324 (1993), affd. 47 F.3d 168">47 F.3d 168 (6th Cir. 1995); Zaentz v. Commissioner, 90 T.C. 753">90 T.C. 753, 90 T.C. 753">760 (1988). A Form 906 is a final and conclusive agreement that is binding only as to matters agreed upon for the taxable period stated in the agreement. Estate of Magarian v. Commissioner, 97 T.C. 1">97 T.C. 1 (1991);1996 Tax Ct. Memo LEXIS 179">*189 90 T.C. 753">Zaentz v. Commissioner, supra at 761-762; sec. 301.7121-1(d) (1), Proced. & Admin. Regs. Closing agreements are interpreted using ordinary contract law principles, which generally require that we look within the "four corners" of the agreement. 100 T.C. 319">Rink v. Commissioner, supra at 325.

The 1989 closing agreement is not a model of clarity. The first introductory clause therein supports respondent's position that the closing agreement relates to a transaction (namely, petitioner's investment in FoodSource), not specific years. Also, the body of the closing agreement, specifically paragraphs (4), (5), (7), and (8), supports respondent's transaction position. However, the second introductory clause clearly supports petitioner's position; it refers to specific taxable years, namely 1979, 1980, 1982, and 1983.

Respondent's agents drafted the closing1996 Tax Ct. Memo LEXIS 179">*190 agreement. It is a well-established principle of contract law that where an agreement contains an ambiguity, the ambiguity is resolved against the drafter of the agreement. See Moore v. Chesapeake & O. Ry. Co., 649 F.2d 1004">649 F.2d 1004, 649 F.2d 1004">1012 (4th Cir. 1981); see also O'Neil v. Retirement Plan For Salaried Employees of RKO General, Inc., 37 F.3d 55">37 F.3d 55, 37 F.3d 55">61 (2d Cir. 1994); Milk ' N' More, Inc. v. Beavert, 963 F.2d 1342">963 F.2d 1342, 963 F.2d 1342">1344 (10th Cir. 1992); United States v. Coleman, 895 F.2d 501">895 F.2d 501, 895 F.2d 501">505 (8th Cir. 1990); Thanet Corp. v. United States, 219 Ct. Cl. 75">219 Ct. Cl. 75, 591 F.2d 629">591 F.2d 629, 591 F.2d 629">633 (Ct. Cl. 1979). This rules applies to the Internal Revenue Service as drafter of a stipulated agreement. Clapp v. Commissioner, 875 F.2d 1396">875 F.2d 1396, 875 F.2d 1396">1399 (9th Cir. 1989).

Each tax year is a separate matter. See Harrah's Club v. United States, 228 Ct. Cl. 650">228 Ct. Cl. 650, 661 F.2d 203">661 F.2d 203, 661 F.2d 203">205 (1981). If the parties had intended 1984 to be included in their closing agreement, they could have done so. But they did not. 1996 Tax Ct. Memo LEXIS 179">*191 Accordingly, we hold that the closing agreement per se does not preclude petitioners from entitlement to the claimed depreciation deduction, investment tax credit, and loss for 1984.

Issue 2. 1984 Depreciation, Investment Tax Credit, and Loss Arising From FoodSource Investment

In order to establish petitioners' entitlement to an investment tax credit and depreciation deduction for 1984, petitioners must establish that: (1) The container was placed in service during the taxable year; (2) petitioner had a profit objective in acquiring and holding the property; and (3) petitioner had a particular basis in the property for tax purposes. In order to establish petitioners' 1984 FoodSource loss, petitioners must prove that it was a loss connected with a transaction entered into for profit.

a. Placed in Service

Depreciation begins, and the investment tax credit is allowed, in the year in which a taxpayer places the qualifying property in service. Secs. 38(a), 46(a) (1) and (2), 46(c); secs. 1.46-3(a) (1), 1.167(a)-10(b), 1.167(a)-11(e)(1)(i), Income Tax Regs. Property is placed in service when it is "placed in a condition or state of readiness and availability for a specifically1996 Tax Ct. Memo LEXIS 179">*192 assigned function, whether in a trade or business, in the production of income, in a tax-exempt activity, or in a personal activity." Secs. 1.46-3(d)(1)(ii), 1.167(a)-11(e)(1)(i), Income Tax Regs.

Here, paragraph (1) of the closing agreement states that petitioner's container was placed in service on December 5, 1983. No evidence to the contrary was presented. Accordingly, petitioners are not entitled to the claimed investment tax credit for 1984.

b. Profit Objective

In order to qualify for depreciation and other expense deductions with respect to the container, petitioners must demonstrate that the container was used in a trade or business or was held for the production of income. Secs. 162, 167, 212.

To be entitled to a depreciation deduction, petitioner must prove that he had "an actual and honest objective of making a profit." Dreicer v. Commissioner, 78 T.C. 642">78 T.C. 642, 78 T.C. 642">646 (1982), affd. without opinion 702 F.2d 1205">702 F.2d 1205 (D.C. Cir. 1983). For this purpose, "profit" means economic profit, independent of tax savings. Surloff v. Commissioner, 81 T.C. 210">81 T.C. 210, 81 T.C. 210">233 (1983). There is no requirement that1996 Tax Ct. Memo LEXIS 179">*193 a reasonable expectation of profit exist. Elliott v. Commissioner, 90 T.C. 960">90 T.C. 960, 90 T.C. 960">970 (1988), affd. without published opinion 899 F.2d 18">899 F.2d 18 (9th Cir. 1990). The determination of whether an activity is engaged in for profit is made by reference to objective standards, taking into account all the facts and circumstances of each case. Brannen v. Commissioner, 78 T.C. 471">78 T.C. 471, 78 T.C. 471">506 (1982), affd. 722 F.2d 695">722 F.2d 695 (11th Cir. 1984). Greater weight is given to the objective facts than to the taxpayer's own statements of intent. Sec. 1.183-2(b), Income Tax Regs.⁹ A taxpayer bears the burden to prove that he engaged in the activity with the objective of realizing an economic profit within the meaning of section 183. 81 T.C. 210">Surloff v. Commissioner, supra.If a taxpayer engages in an activity without a profit objective, deductions attributable to the activity are allowed only to the extent of the income derived from the activity. Sec. 183; Hager v. Commissioner, 76 T.C. 759">76 T.C. 759, 76 T.C. 759">781 (1981).

1996 Tax Ct. Memo LEXIS 179">*194 Petitioner argues that he had an honest and actual profit objective in purchasing the container. He also contends that his investment in the container was a business or an enterprise entered into for profit. Respondent, on the other hand, argues that petitioner's FoodSource investment was only a means of receiving tax benefits. We agree with respondent.

Petitioner contends that he did everything he could "to guarantee this was [a] legitimate investment." Although petitioner did request a law firm to review literature from FoodSource, he did nothing else. He did not seek any independent verification of the information FoodSource provided. He did not inquire as to the actual cost of manufacturing the container, nor did he attempt to evaluate the container's fair market value. Based on the record before us, we are not persuaded that petitioner had an actual and honest profit objective with respect to his involvement in the FoodSource program. See Sutton v. Commissioner, 84 T.C. 210">84 T.C. 210, 84 T.C. 210">222-226 (1985), affd. per curiam 788 F.2d 695">788 F.2d 695 (11th Cir. 1986)

We do not believe that petitioner invested $ 26,000, in a year when petitioners' 1996 Tax Ct. Memo LEXIS 179">*195 income was approximately $ 35,000, for the purpose of generating an unknown and unsubstantiated amount of future income. Clearly, of considerable if not primary importance to petitioner in his participation in the FoodSource program was the immediate tax advantages he could achieve and the refunds that could be (and were) claimed on petitioners' amended returns for prior years.

Petitioner had no background or experience in the transportation of produce, nor did he exhibit any desire to become involved with it. He did not follow up on his investment to determine whether the container was completed or placed in an income-producing use. He never had control over the container.

None of the factors enunciated in section 1.183-2(b), Income Tax Regs., favors petitioners other than the absence of personal pleasure or recreation factor. We conclude, and thus hold, that petitioner's investment in the FoodSource container was not made with an actual and honest profit objective. Petitioners therefore are not entitled to the depreciation deduction for 1984. ¹⁰

1996 Tax Ct. Memo LEXIS 179">*196 c. Business Loss

Petitioners have the burden of establishing that petitioner sustained a loss in a transaction entered into for profit in 1984. Section 165 provides as follows:

SEC. 165. LOSSES.

(a) General Rule.--There shall be allowed as a deduction any loss sustained during the taxable year and not compensated for by insurance or otherwise.

* * * *

(c) Limitation On Losses Of Individuals. -- In the case of an individual, the deduction under subsection (a) shall be limited to--

* * * *

Petitioners argue that they are entitled to a $ 27,300 ¹¹ loss pursuant to section 165 with respect to petitioner's investment in the FoodSource program. Respondent contends that petitioner did not enter into the FoodSource program primarily for profit and therefore petitioners are not entitled to the loss claimed. 1996 Tax Ct. Memo LEXIS 179">*197 See Fox v. Commissioner, 82 T.C. 1001">82 T.C. 1001, 82 T.C. 1001">1021 (1984).

The only evidence petitioners presented in this regard was petitioner's blanket assertion that he possessed a profit motive in entering the FoodSource investment. We are not required to, and do not, accept this blanket self-serving assertion. Petitioner attempted in 1984 to recoup his lost investment from prior years. He has failed to show that he entered into the FoodSource program primarily for profit or that he sustained any business-related loss in 1984.

We conclude that petitioners are not entitled to a section 165 deduction in 1984 for the $ 27,300 invested in the FoodSource program.

To reflect the foregoing,

Decision will be entered for respondent.