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OPINION
I. Deficiencies
A. Issue
The issue we must address is whether the net farm losses
claimed by petitioners on their 1992 and 1993 Federal income tax
returns result from an activity not engaged in for profit, as
that term is used in section 183.
B. Section 183: For-Profit Requirement
In pertinent part, section 183(a) provides: “In the case of
an activity engaged in by an individual * * * if such activity is
not engaged in for profit, no deduction attributable to such
activity shall be allowed under this chapter except as provided
in this section.” Section 183(c) provides: “For purposes of this
section, the term ‘activity not engaged in for profit’ means any
activity other than one with respect to which deductions are
allowable for the taxable year under section 162 or under
paragraph (1) or (2) of section 212.” Deductions are allowable
under section 162 for expenses of carrying on activities that
constitute a trade or business of the taxpayer and under section
212 for expenses incurred in connection with activities engaged
in for the production or collection of income or for the
management, conservation, or maintenance of property held for the
production of income. No deductions are allowable under sections
162 or 212 for the expenses of an activity that is carried on
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Last modified: May 25, 2011