-16-
were in fact expended, but rather contests their deductibility.
Respondent maintains petitioner was not engaged in the trade or
business of being an author, and, accordingly, expenses incurred
for the writing (and publication of one) of his books are not
business expenses deductible under section 162(a). Rather, he
argues, they are deductible only to the extent of the income
derived from the activity under section 183.12 Alternatively, if
the activity is found to have been entered into for profit,
respondent asserts that the claimed expenses were not properly
deductible as ordinary and necessary under section 162 and that
certain expenses were not adequately substantiated under section
274(d). At trial, respondent conceded that, with respect to
section 274(d), the only element of substantiation lacking in
this case is business purpose.
Petitioner bears the burden of proving by a preponderance of
the evidence that he was engaged in writing for profit. Rule
142(a). The test of whether a taxpayer engaged in an activity
for profit is whether he entered into, or continued, the activity
with an actual and honest objective of making a profit. See
Dreicer v. Commissioner, 78 T.C. 642, 645 (1982), affd. without
12Sec. 183 was enacted to codify the distinction between a
business and a hobby and to prohibit a taxpayer from obtaining a
loss from an activity considered to be a hobby which was then
used to offset other income. See S. Rept. 91-552, at 104 (1969),
1969-3 C.B. 423, 490.
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