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meaning of section 183. Petitioner contends that his metal
mining and refining activity was entered into with a profit
objective. Respondent contends that petitioner’s metal mining
and refining activity was an activity "not engaged in for profit"
within the meaning of section 183. Sec. 183(c).
Section 183(a) 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).3 An "activity not engaged in for
profit" means any activity other than one for which deductions
are allowable under section 162 or under paragraphs (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.
Whether deductions are allowable under sections 162 or 212
depends on whether the taxpayer engaged in the activity with the
3 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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