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of $2,150 and $3,500 for 1992 and 1993, respectively. From 1986
through 1996, petitioner reported the following Schedule F gross
income and net losses from the horse breeding activity:
Year Gross Income (Net Losses)
1986 Unknown ($92,210)
1987 Unknown (92,560)
1988 Unknown (99,725)
1989 Unknown (122,948)
1990 $-0- (101,889)
1991 388 (119,872)
1992 2,085 (117,904)
1993 -0- (115,729)
1994 300 (154,365)
1995 19,136 (130,660)
1996 32,137 (104,137)
In the notice of deficiency, respondent determined that
petitioner did not engage in the horse breeding activity for
profit and therefore disallowed the losses claimed for 1992 and
1993.
OPINION
Section 183(a) provides generally that, if an activity is
not engaged in for profit, no deduction attributable to such
activity shall be allowed except as provided in section 183(b).
Section 183(c) defines an "activity not engaged in for profit" as
"any activity other than one with respect to which deductions are
allowable for the taxable year under section 162 or under
paragraph (1) or (2) of section 212."
For a deduction to be allowed under sections 162 or 212(1)
or (2), a taxpayer must establish that he or she engaged in the
activity with an actual and honest objective of making an
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