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to deduct his expenditures currently. Respondent contends that
petitioner lacked the necessary profit objective. Respondent
further contends that even if petitioner engaged in the Windmill
Distillery activity for profit, his expenditures were to acquire
or improve land or depreciable property and, therefore,
petitioner is not entitled to any deduction under section 174.
Since we agree with respondent that petitioner did not engage in
the activity for profit, we do not reach the question whether
petitioner's expenditures were to acquire or improve land or
depreciable property.
In determining whether an activity is engaged in for profit
for purposes of section 174, courts have found it helpful to
consider the regulations issued, and cases that have arisen,
under section 183. See, e.g., Nickeson v. Commissioner, 962 F.2d
973 (10th Cir. 1992), affg. Brock v. Commissioner, T.C. Memo.
1989-641; Independent Elec. Supply, Inc. v. Commissioner, 781
F.2d 724 (9th Cir. 1986), affg. T.C. Memo. 1984-472. The section
183 cases indicate that whether an individual engages in an
activity for profit depends on whether he or she entertains an
actual and honest profit objective in engaging in the activity.
The taxpayer's expectations do not have to be reasonable or
realistic, but simply honest. Burger v. Commissioner, 809 F.2d
355, 358 (7th Cir. 1987), affg. T.C. Memo. 1985-523. Whether a
taxpayer conducts an activity with the requisite profit intent
rests on the facts of the case. Golanty v. Commissioner, 72 T.C.
411, 426 (1979), affd. without published opinion 647 F.2d 170
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