B. Albert and Betty M. Holowinski - Page 6

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          not engaged in for profit.  Respondent further determined that              
          petitioners were liable for an accuracy-related penalty for each            
          year in issue pursuant to section 6662(a) for negligence or                 
          disregard of rules or regulations.  In addition, respondent made            
          certain computational adjustments as a result of the disallowance           
          of the Schedule C losses.3                                                  
          A. Activity for Profit                                                      
               Section 162(a) allows deductions for ordinary and necessary            
          expenses in carrying on a trade or business.  Section 183(a)                
          generally provides that an individual's deductions attributable             
          to an activity not engaged in for profit shall only be allowed to           
          the extent provided in section 183(b).  Section 183(b) generally            
          limits the deductions from an activity not engaged in for profit            
          to the sum of (1) otherwise allowable deductions, and (2) any               
          other deductions attributable to the activity to the extent the             
          gross income from the activity exceeds the otherwise allowable              
          deductions.  Section 183(c) defines an "activity not engaged in             
          for profit" as any activity other than one for which deductions             
          are allowable under section 162 or under paragraph (1) or (2) of            
          section 212.  The test for determining whether an individual is             
          carrying on a trade or business under section 162, or whether an            

          3   The computational adjustments affect the amount of                      
          petitioners' Social Security benefits that are taxable for                  
          certain years, and petitioners' medical expense deduction for               

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