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In the notices of deficiency, respondent determined that
petitioners were not engaged in a golf sponsorship activity for
profit within the meaning of section 183(a) and disallowed the
losses for 1992 and 1993.
OPINION
Section 183 limits the deductions for an activity not
entered into for profit to the amount of the activity's income.
Sec. 183(b). 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."7 An activity is
engaged in for profit if the taxpayer entertained an actual and
honest, even though unreasonable or unrealistic, profit objective
in engaging in the activity. Smith v. Commissioner, 937 F.2d
1089, 1097 (6th Cir. 1991), revg. 91 T.C. 733 (1988); Campbell v.
Commissioner, 868 F.2d 833, 836 (6th Cir. 1989), affg. in part,
revg. in part, and remanding T.C. Memo. 1986-569; Ronnen v.
Commissioner, 90 T.C. 74, 91 (1988); Dreicer v. Commissioner, 78
T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205 (D.C.
Cir. 1983); sec. 1.183-2(a), Income Tax Regs. The determination
7 Section 162 deals with "trade or business expenses",
which are limited to "ordinary and necessary expenses paid or
incurred * * * in carrying on any trade or business". Sec. 212
deals with expenses for the "production or collection of income"
or "management, conservation, or maintenance of property held for
the production of income".
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