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asserts that the loss is allowable as a business loss. In the
alternative, petitioner asserts that the loss is a casualty loss,
since her incarceration by the State of Missouri caused the loss.
Section 165(a) allows a taxpayer to deduct "any loss
sustained during the taxable year and not compensated for by
insurance or otherwise." However, section 165(c) limits the
scope of this deduction for individuals. Individuals may take
deductions only for losses which are incurred in a trade or
business, losses incurred in transactions entered into for
profit, and certain casualty and theft losses. Sec. 165(c)(1),
(2), and (3).
To demonstrate that a loss was incurred in a trade or
business or a transaction entered into for profit, the taxpayer
must show that the activity in question was undertaken with the
primary intention and motivation of making a profit. Jasionowski
v. Commissioner, 66 T.C. 312, 319 (1976).
During trial, petitioner conceded that the Mustang was used
only for personal use. Except for this testimony, petitioner
presented no evidence indicating that the Mustang was used in any
activity which she engaged in for profit. Accordingly, we find
that petitioner may not claim a deduction for the loss she
sustained on the sale of the Mustang under either section
165(c)(1) or (2). Seletos v. Commissioner, 254 F.2d 794, 797
(8th Cir. 1958), affg. T.C. Memo. 1956-283; Newton v.
Commissioner, 57 T.C. 245, 248 (1971).
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