- 6 -
negative $40,112, respectively, and accordingly did not report
any income tax liability for those years.
In the notice of deficiency, respondent determined that
petitioner did not engage in his meteorite and pyrite collection
activity for profit within the meaning of section 183.
(Alternatively, respondent determined that petitioner failed to
substantiate the expenses claimed.) Respondent also
recharacterized the gross income reported on petitioner's
Schedules C as interest income properly reportable on Schedules B
and line 8a of Forms 1040.
OPINION
Respondent contends that petitioner is not entitled to the
claimed Schedule C losses because petitioner's meteorite and
pyrite collection activity was not engaged in for profit. In the
alternative, respondent contends that petitioner failed to
substantiate the claimed losses.
Under section 183(a), if an activity is not engaged in for
profit, then no deduction attributable to that activity is
allowable except to the extent provided by section 183(b). In
pertinent part, section 183(b) allows deductions to the extent of
gross income derived from such activity.8
8 As previously stated, petitioner did not derive any gross
income from the sale of meteorites or pyrite in 1995 or 1996;
rather, the gross income that he reported on his Schedules C
(continued...)
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