- 13 - activity for profit and was not engaged in the trade or business of consulting in 1995. Respondent is sustained on this issue. Schedule C Expenses As stated above, a taxpayer must show that he engaged in an activity with the objective of making a profit in order to deduct expenses incurred under either section 162 or section 212. See Golanty v. Commissioner, 72 T.C. 411, 425 (1979), affd. without published opinion 647 F.2d 170 (9th Cir. 1981). Where an activity is not engaged in for profit, section 183(b)(1) allows deductions that are not dependent on profit objectives, e.g., certain interest and State and local taxes. Additional deductions are allowed under section 183(b)(2) as if the activity were engaged in for profit, but such deductions are allowed only to the extent that gross income from the activity exceeds deductions already allowed under section 183(b)(1). As stated above, petitioner has failed to establish that he engaged in the consulting activity in 1995 with the objective of making a profit. Additionally, petitioner failed to earn any gross income in the consulting activity for the year in issue. Since petitioner earned no consulting income in 1995, he is unable to deduct any Schedule C expenses pursuant to section 183(b), and we need not address the substantiation issue.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
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