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In June of 1989, petitioners' house sustained damages from
termite infestation as well as a tornado and flood caused by
Tropical Storm Allison. Tropical Storm Allison was declared a
major disaster that year, and petitioners were awarded a grant in
the amount of $5,660 from the Federal Emergency Management Agency
(FEMA) and the Louisiana State Individual and Family Grant (IFG)
Program. Termite damage required repairs in 1990 as well.
OPINION
Respondent determined deficiencies in petitioners' 1989,
1990, and 1991 Federal income taxes in the amounts of $4,226,
$4,504, and $5,625, respectively, and penalties pursuant to
section 6662(a) for negligence in the amounts of $845, $901, and
$1,125, respectively. Respondent's determinations are presumed
correct, and petitioners have the burden of proving otherwise.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
1. Publishing Activity
Section 183 provides that if an activity engaged in by an
individual is not engaged in for profit, no deduction
attributable to such activity shall be allowed, except as
provided in section 183(b).2 An "activity not engaged in for
2 In the case of an activity not engaged in for profit, sec.
183(b)(1) allows a deduction for expenses that are otherwise
deductible without regard to whether the activity is engaged in
for profit. Sec. 183(b)(2) allows a deduction for expenses that
would be deductible only if the activity were engaged in for
profit, but only to the extent the total gross income derived
from the activity exceeds the deductions allowed by sec.
183(b)(1).
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