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petitioners were not engaged in their horse-related activities
for profit within the meaning of section 183(a) and disallowed
the loss for 1992.
OPINION
The issue to be resolved is whether petitioners' horse-
related activities4 constituted an "activity not engaged in for
profit" within the meaning of section 183. Section 183(a)
generally disallows a deduction for activities not engaged in for
profit except as provided in section 183(b). Section 183(b)(1)
allows deductions for an activity which are otherwise allowable
regardless of profit objective. Section 183(b)(2) allows those
deductions which would be allowable if the activity were engaged
in for profit, but only to the extent that gross income
attributable to the activity exceeds the deductions permitted by
section 183(b)(1). Section 183(c) defines "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."
Deductions are allowable under section 162 with respect to
activities for which the taxpayer has demonstrated that his
"primary purpose for engaging in the activity * * * [was] for
income or profit." Commissioner v. Groetzinger, 480 U.S. 23, 35
4 The parties have treated all of petitioners' horse-related
activities as a single activity for purposes of sec. 183. See
sec. 1.183-1(d)(1), Income Tax Regs.
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