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profit" is any activity for which deductions would not be allowed
under section 162 or under paragraph (1) or (2) of section 212.
Sec. 183(c). Section 162 allows a deduction for all the ordinary
and necessary expenses paid or incurred in carrying on a
business. Section 212 allows a deduction for all the ordinary
and necessary expenses paid or incurred for the production or
collection of income, or for the management, conservation, or
maintenance of property held for the production of income. The
profit standards applicable to section 212 are the same as those
used in section 162. See Antonides v. Commissioner, 893 F.2d
656, 659 (4th Cir. 1990), affg. 91 T.C. 686 (1988).
For a taxpayer to deduct expenses of an activity pursuant to
section 162, he must show that he engaged in the activity with an
actual and honest objective of making a profit. Sec. 183;
Ronnen v. Commissioner, 90 T.C. 74, 91 (1988); Fuchs v.
Commissioner, 83 T.C. 79, 97-98 (1984); Dreicer v. Commissioner,
78 T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205
(D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs. Although a
reasonable expectation of profit is not required, the taxpayer's
profit objective must be bona fide. Hulter v. Commissioner, 91
T.C. 371, 393 (1988); Beck v. Commissioner, 85 T.C. 557, 569
(1985). "Profit" in this context means economic profit,
independent of tax savings. Drobny v. Commissioner, 86 T.C.
1326, 1341 (1986). Whether a taxpayer had an actual and honest
profit objective is a question of fact to be resolved from all
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