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Petitioners argue that Robert's activities during 1989
resulted in a net loss of $94,000, which, they say, is not an
indication of participating in a "gainful activity". But we have
held in another context, which by analogy is relevant here, that
a taxpayer may be engaged in a profit-making activity, even
without actually making a profit in a given year, if the
individual has an actual and honest profit-making objective. See
Dreicer v. Commissioner, 78 T.C. 642, 646 (1982), affd. without
published opinion 702 F.2d 1205 (D.C. Cir. 1983). We equate a
"substantial gainful activity" in this context with an "actual
and honest objective of making a profit." Obviously, petitioner
did not have failure to make a profit as his objective, even
though as it turned out he failed to make a profit from his
trading activities in 1989.
Petitioners criticize, as being too restrictive, the
regulatory standard of a mental disease impairment that would be
considered as preventing gainful activity. The standard is
contained in section 1.72-17A(f)(2)(vi), Income Tax Regs., which
reads as follows:
(vi) Mental diseases (e.g., psychosis
or severe psychoneurosis) requiring continued
institutionalization or constant supervision
of the individual;
Petitioners argue that Robert was under "constant
supervision" for two years and that the alternative regulatory
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