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section 6662(b)(2) for 1990 and section 6662(b)(1) for 1991 and 1992.
OPINION
We begin by noting that respondent's determinations are
presumed correct, and petitioners bear the burden of proving that
those determinations are erroneous. Rule 142(a); Welch v.
Helvering, 290 U.S. 111 (1933). Deductions are a matter of
legislative grace, and petitioners have the burden of proving
that they are entitled to any claimed deductions. INDOPCO, Inc.
v. Commissioner, 503 U.S. 79, 84 (1992).
I. Claimed Business Loss Deductions for Model Railroad Activity
Section 1837 provides, in general, that an individual will not be
7 SEC. 183. ACTIVITIES NOT ENGAGED IN FOR PROFIT.
(a) GENERAL RULE.--In the case of an activity engaged in by
an individual or an S corporation, if such activity is not
engaged in for profit, no deduction attributable to such activity
shall be allowed under this chapter except as provided in this
section.
(b) DEDUCTIONS ALLOWABLE.--In the case of an activity not
engaged in for profit to which subsection (a) applies, there
shall be allowed--
(1) the deductions which would be allowable under this
chapter for the taxable year without regard to whether or
not such activity is engaged in for profit, and
(2) a deduction equal to the amount of the deductions
which would be allowable under this chapter for the taxable
year only if such activity were engaged in for profit, but
only to the extent that the gross income derived from such
activity for the taxable year exceeds the deductions
allowable by reason of paragraph (1).
(c) ACTIVITY NOT ENGAGED IN FOR PROFIT DEFINED.--For
purposes of this section, the term "activity not engaged in for
profit" means any activity other than one with respect to which
deductions are allowable for the taxable year under section 162
(continued...)
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