-17-
In the context of the instant case, the effect of section
1834 is that petitioner’s disputed deductions are allowable but
4 Sec. 183 provides, in pertinent part, as follows:
SEC. 183. ACTIVITIES NOT ENGAGED IN FOR PROFIT.
(a) 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 [i.e., chapter 1, relating to normal
taxes and surtaxes] except as provided in this section.
(b) Deductions Allowable.--In the case of an activity not
engaged in for profit to which subsection (a) applies, there
shall be allowed--
(1) the deductions which would be allowable under this
chapter for the taxable year without regard to whether or
not such activity is engaged in for profit, and
(2) a deduction equal to the amount of the deductions
which would be allowable under this chapter for the taxable
year only if such 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).
(c) Activity Not Engaged in for Profit Defined.--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.
Sec. 162 provides, in pertinent part, as follows:
SEC. 162. TRADE OR BUSINESS EXPENSES.
(a) In General.--There shall be allowed as a deduction all
the ordinary and necessary expenses paid or incurred during the
taxable year in carrying on any trade or business * * *
Sec. 212 provides, in pertinent part, as follows:
(continued...)
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