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profit objective). His written report largely restates facts
already in the record and offers no independent research. Mr.
Cosby has never been engaged in the business of cattle ranching
and has not made any study of profitable cattle operations upon
which to base his comparisons. Respondent’s motion in limine is
granted.
Statutory Provisions and Interpretation – For Profit Activity
Section 183(a) states the following general rule: “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(b)(1) then goes on to
prescribe that, if an activity is not engaged in for profit, a
taxpayer may take those deductions which would be allowable
without regard to profit motive (e.g., certain interest and tax
expenses). Furthermore, if the activity is not engaged in for
profit, section 183(b)(2) permits the taxpayer to claim those
deductions which would be allowable if the activity were engaged
in for profit, “but only to the extent that the gross income
derived from such activity for the taxable year exceeds the
deductions allowable by reason of paragraph (1).” In other
words, because deductions for expenses related to a not-for-
profit activity are generally limited to the amount of gross
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