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sections 165(c) and (f) and 166(d)(1) and (2). Petitioners
assert that the loss related to Southern Express was incurred and
proximately related to petitioner's trade or business of
promoting, developing, organizing, and financing startup
businesses, and is thus ordinary under section 165(a) and (c)(1)
or, in the alternative, a business bad debt under section 166(a).
Section 165(a) provides, "There shall be allowed as a
deduction any loss sustained during the taxable year and not
compensated for by insurance or otherwise." In the case of an
individual, the deduction under section 165(a) is limited to
certain circumstances, including losses incurred in a trade or
business. Sec. 165(c)(1). Petitioner asserts that he is engaged
in a trade or business of promoting, developing, organizing, and
financing startup businesses. We disagree.
To be engaged in a trade or business, an individual must be
involved in an activity with continuity and regularity, and the
primary purpose for engaging in the activity must be for income
or profit. Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987).
A sporadic activity, a hobby, or an amusement diversion does not
qualify. Id. Whether an individual is carrying on a trade or
business requires an examination of the facts involved in each
case. Higgins v. Commissioner, 312 U.S. 212, 217 (1941).
Petitioner bears the burden of proving that he was engaged in a
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