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entitled to a deduction for a business bad debt. Consequently,
we sustain respondent's determination that the loss in question
constituted a nonbusiness bad debt.
3. Schedule C Losses
Petitioners filed Schedules C with their 1980 and 1981
Federal income tax returns reporting net losses from an activity
entitled "Computer Books + Tapes" in the respective amounts of
$6,880 and $1,162. Respondent determined, inter alia, that such
activity was not entered into for profit, and, consequently,
disallowed the claimed losses pursuant to section 183(a).
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 that would be
allowable without regard to whether such activity is engaged in
for profit are to be allowed. Section 183(b)(2) further
indicates 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).
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