Greta Ann Clifton - Page 21

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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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