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taxpayer's trade or business for purposes of section 162, the
activity must be conducted "with continuity and regularity" and
"the taxpayer's primary purpose for engaging in the activity must
be for income or profit." Commissioner v. Groetzinger, 480 U.S.
23, 35 (1987).
Consistent with the manner in which petitioner reported the
income and expenses attributable to petitioner's dog breeding
activity on her 1993 Federal income tax return, she argues that
she engaged in that activity during 1993 with the intent to make
a profit, and therefore the activity constitutes a trade or
business. She further points out that her return for taxable
year 1989 was examined and respondent allowed her to treat the
dog breeding activity as a trade or business.
Respondent argues that petitioner's dog breeding activity
did not constitute a trade or business during 1993 because
petitioner did not engage in that activity with the requisite
intent to profit. Consequently, according to respondent,
petitioner is only entitled to deduct the expenses related to
petitioner's dog breeding activity as allowable under section
183.
The test of whether a taxpayer conducted an activity for
profit is whether he or she entered into, or continued, the
activity with an actual or honest objective of making a profit.
Keanini v. Commissioner, 94 T.C. 41, 46 (1990); Dreicer v.
Commissioner, 78 T.C. 642, 644-645 (1982), affd. without opinion
702 F.2d 1205 (D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs.
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