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OPINION
We must decide whether petitioners' activities were "not
engaged in for profit" within the meaning of section 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 that activity shall be allowed except as provided
in section 183(b).4 Section 183(c) defines an activity not
engaged in for profit as "any activity other than one with
respect to which deductions are allowable for the taxable year
under section 162 or under paragraph (1) or (2) of section 212."
Sec. 183(c). Section 162 allows a deduction for all 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 section 162 or 212
depends on whether the taxpayer engaged in the activity with the
objective of making a profit. Elliott v. Commissioner, 90 T.C.
960, 970 (1988), affd. without published opinion 899 F.2d 18 (9th
4 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 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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