- 5 - downline distributors. In addition, many of his downliners had their own downliners. Mr. Ogden or petitioners reported gross income of $1,082, $2,041, and $5,290 in 1993, 1994, and 1995, respectively. The principal categories of deductions claimed on the Schedule C for 1993, 1994, and 1995 are set forth below. Mr. Ogden or petitioners claimed deductions for car and truck expenses of $9,613, $11,488, and $12,130, respectively. They also claimed deductions for travel, meals, and entertainment of $4,931, $4,153, and $2,242, respectively. Mr. Ogden or petitioners deducted total expenses on the Schedules C of $21,322, $21,693 and $24,982 during 1993, 1994, and 1995, respectively. As stated, respondent determined that these deductions should be disallowed because petitioners did not have the requisite profit objective under section 183. Section 183(a) disallows any deductions attributable to activities not engaged in for profit except as provided under section 183(b). Taxpayers need not have a reasonable expectation of profit. However, the facts and circumstances must demonstrate that they entered into the activity, or continued the activity, with the actual and honest objective of making a profit. Taube v. Commissioner, 88 T.C. 464, 478 (1987); Dreicer v. Commissioner, 78 T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205 (D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs. The taxpayer's motive to make a profit must be analyzed byPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011