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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.
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