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OPINION
Petitioners bear the burden of proving that respondent's
determinations in the notice are erroneous. Rule 142(a); Welch
v. Helvering, 290 U.S. 111, 115 (1933).
Section 183(a) generally limits the amount of expenses that
a taxpayer may deduct with respect to an activity "not engaged in
for profit" to the deductions provided in section 183(b).
Section 183(b)(1) provides that deductions which would be allow-
able without regard to whether such activity is engaged in for
profit are to be allowed. Section 183(b)(2) further provides
that deductions which would be allowable only if such activity
were engaged in for profit are to be allowed, but only to the
extent that the gross income derived from such activity for the
taxable year exceeds the deductions allowable under section
183(b)(1). An activity is "not engaged in for profit" if it is
an activity other than one with respect to which deductions are
allowable for the taxable year under section 162 or section
212(1) or (2). Sec. 183(c).
In determining whether an activity is engaged in for profit,
the taxpayer must show that he or she engaged in the activity
with an actual and honest objective of making a profit. E.g.,
2(...continued)
during 1992 and 1993 with the objective of making a profit within
the meaning of sec. 183, they would be entitled for those years
to losses from that activity in the respective amounts of $26,487
and $41,486.
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Last modified: May 25, 2011