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Apple Orchard Not Engaged In For Profit
As we have decided that petitioners' undertakings are two
separate activities, we now consider the income and expenses of
the apple orchard activity separately in deciding whether the
apple orchard activity was conducted with a profit objective.
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 provides
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 during
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 years under section 162 or under
paragraph (1) or (2) of section 212. Sec. 183(c).
In determining whether an activity is engaged in for profit,
the taxpayer must show that he or she engaged in the activity
with an "actual and honest objective of making a profit."
Dreicer v. Commissioner, 78 T.C. 642, 645 (1982), affd. without
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