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conservation, or maintenance of property held for the production
of income, or (3) the determination, collection, or refund of any
tax. Section 212 applies to income-producing activity that is
not a trade or business. Woodward v. Commissioner, 397 U.S. 572,
575 n.3 (1970); United States v. Gilmore, 372 U.S. 39, 44-45
(1963).
Section 162(a) allows a deduction for all ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business. Petitioners must establish
that the expenditures in question related to activities which
amounted to the present carrying on of a business. Reisinger v.
Commissioner, 71 T.C. 568, 572 (1979).
Whether the taxpayer is engaged in a trade or business and
what is the nature of such trade or business are questions of
fact. Ford v. Commissioner, 56 T.C. 1300, 1307 (1971), affd. per
curiam 487 F.2d 1025 (9th Cir. 1973); Corbett v. Commissioner, 55
T.C. 884, 887 (1971). The Supreme Court has interpreted the
"trade or business" terminology of section 162 to mean that "the
taxpayer must be involved in the activity with continuity and
regularity and that the taxpayer's primary purpose for engaging
in the activity must be for income or profit." Commissioner v.
Groetzinger, 480 U.S. 23, 35 (1987). The courts distinguish
between business losses and investment losses. See, e.g.,
Whipple v. Commissioner, 373 U.S. 193 (1963).
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