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the extent that gross income attributable to the activity exceeds
the deductions permitted by section 183(b)(1).
Section 183(c) defines an activity which is "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." Deductions under
sections 162 or 212(1) or (2) require the "actual and honest
objective of making a profit." Dreicer v. Commissioner, 78 T.C.
642, 645 (1982), affd. without opinion 702 F.2d 1205 (D.C. Cir.
1983). Profit means economic profit independent of tax savings.
Antonides v. Commissioner, 91 T.C. 686, 694 (1988), affd. 893
F.2d 656 (4th Cir. 1990). Although the expectation of making a
profit need not be reasonable, the facts and circumstances must
indicate that the taxpayer entered into the activity, or
continued it, with the actual and honest objective of making a
profit. Id.; Dreicer v. Commissioner, supra at 645; sec. 1.183-
2(a), Income Tax Regs.
Although the section 183 analysis with respect to the
activities of a subchapter S corporation is applied at the
corporate level, sec. 1.183-1(f), Income Tax Regs., a taxpayer's
intent is attributable to his wholly owned S corporation, see
Ballard v. Commissioner, T.C. Memo. 1996-68; Sousa v.
Commissioner, T.C. Memo. 1989-581; Kartrude v. Commissioner, T.C.
Memo. 1988-498, affd. in part, revd. in part on another ground
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