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1991. We sustain respondent's determination that petitioner was
not engaged in a trade or business in 1991.
Issue 2(b). Whether Petitioner's Activity Was Engaged In For
Profit Within the Meaning of Section 212
Having concluded that petitioner was not engaged in a trade
or business under section 162 in 1991, we consider whether, in
1991, petitioner was engaged in an activity for the production of
income under section 212. While both sections 162 and 212 allow
a deduction for ordinary and necessary expenses, section 162(a)
requires that the expenses be paid or incurred in carrying on a
trade or business, whereas section 212 requires only that the
expenses be paid or incurred for (1) the production or collection
of income, Tybus v. Commissioner, T.C. Memo. 1989-309, or (2)
"the management, conservation, or maintenance of property held
for the production of income", sec. 212(2).
Expenses paid or incurred in managing, conserving, or
maintaining property held for investment may be deductible under
section 212 even though the property is not currently productive.
Sec. 1.212-1(b), Income Tax Regs. Section 212 was designed to
allow deductions for certain nontrade or nonbusiness expenses.
Lykes v. United States, 343 U.S. 118 (1952).
The Supreme Court first interpreted section 212 in Bingham’s
Trust v. Commissioner, 325 U.S. 365 (1945). While the Court in
Bingham’s Trust stressed the parallelism between sections 212 and
162, it held that deductible expenses need not relate directly to
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