- 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 by
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