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engaged in for profit" means any activity other than one for
which deductions are allowable under section 162 or under
paragraph (1) or (2) of section 212. Sec. 183(c).
Deductions are allowed under section 162 for the ordinary
and necessary expenses of carrying on an activity that
constitutes the taxpayer's trade or business. Deductions are
allowed under section 212 for expenses paid or incurred in
connection with an activity engaged in for the production or
collection of income, or for the management, conservation, or
maintenance of property held for the production of income. With
respect to either section, however, the taxpayer must demonstrate
a profit objective for the activities in order to deduct
associated expenses. See Jasionowski v. Commissioner, 66 T.C.
312, 320-322 (1976); sec. 1.183-2(a), Income Tax Regs. The
profit standards applicable to section 212 are the same as those
used in section 162. See Agro Science Co. v. Commissioner, 934
F.2d 573, 576 (5th Cir. 1991), affg. T.C. Memo. 1989-687;
Antonides v. Commissioner, 893 F.2d 656, 659 (4th Cir. 1990),
affg. 91 T.C. 686 (1988); Allen v. Commissioner, 72 T.C. 28, 33
(1979); Rand v. Commissioner, 34 T.C. 1146, 1149 (1960).
2(...continued)
only to the extent that the gross income derived from the
activity exceeds the deductions allowed by sec. 183(b)(1).
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