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in this section." Section 183(c) provides: "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 or under
paragraph (1) or (2) of section 212."
The question we must decide is whether petitioner's activity
of operating Playa de los Vivos constituted an activity "not
engaged in for profit".
B. Actual and Honest Profit Objective
An activity is engaged in for profit if the taxpayer has an
"actual and honest objective of making a profit." Keanini v.
Commissioner, 94 T.C. 41, 46 (1990) (quoting Dreicer v.
Commissioner, 78 T.C. 642, 644-645 (1982), affd. without opinion
702 F.2d 1205 (D.C. Cir. 1983)). Although the expectation of
profit need not be reasonable, a bona fide profit objective must
exist. Keanini v. Commissioner, supra at 46; Dreicer v.
Commissioner, supra; Golanty v. Commissioner, 72 T.C. 411,
425-426 (1979), affd. without published opinion 647 F.2d 170 (9th
Cir. 1981); sec. 1.183-2(a), Income Tax Regs. Profit in this
context means economic profit, independent of tax savings.
Antonides v. Commissioner, 91 T.C. 686, 694 (1988), affd. 893
F.2d 656 (4th Cir. 1990); Hulter v. Commissioner, 91 T.C. 371,
393 (1988). Petitioner's objective is a question of fact to be
determined from all the facts and circumstances, keeping in mind
that petitioner bears the burden of proof. Rule 142(a); Keanini
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