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County and Maryland Casualty Co. Respondent determined that
petitioner's horse activity did not constitute an activity
engaged in for profit under section 183. Accordingly, respondent
disallowed the losses claimed by petitioner.
OPINION
We must decide whether section 183 applies to petitioner's
horseracing and horse-breeding activity. Respondent maintains
that petitioner's lack of a profit objective precludes him from
deducting the expenses attributable to that activity in excess of
those which are allowed by section 183. In contrast, petitioner
contends that he possessed the requisite profit objective during
the years at issue and, therefore, section 183 is inapplicable.
Accordingly, petitioner argues that the expenses attributable to
his horse activity are fully deductible under section 162. We
agree with petitioner.
Section 183 allows only specified deductions unless an
activity is engaged in for profit. Section 183(c) defines an
activity not engaged in for profit as any activity other than one
with respect to which deductions are allowable for the taxable
years under section 162 or under paragraphs (1) or (2) of section
212. Petitioner argues that he engaged in the horse activity
with the requisite profit objective; respondent disagrees.
An activity engaged in for profit is one in which the
taxpayer has an actual and honest objective of making a profit.
Dreicer v. Commissioner, 78 T.C. 642, 645 (1982), affd. without
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