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section 212.” Accordingly, section 183 is considered in pari
materia with sections 162 and 212. See sec. 1.183-2(a), Income Tax
Regs.
The basic standard for determining whether an expense is
deductible under sections 162 and 212 (and thus not subject to the
limitations of section 183) is the following: a taxpayer must show
that he or she engaged in or carried on the activity with an actual
and honest objective of making a profit. See Antonides v.
Commissioner, 893 F.2d 656, 659 (4th Cir. 1990), affg. 91 T.C. 686
(1988); Independent Elec. Supply, Inc. v. Commissioner, 781 F.2d
724, 726 (9th Cir. 1986), affg. Lahr v. Commissioner, T.C. Memo.
1984-472; Ronnen v. Commissioner, 90 T.C. 74, 91 (1988); sec.
1.183-2(a), Income Tax Regs. Although a reasonable expectation of
profit is not required, the taxpayer’s profit objective must be
bona fide. See Hulter v. Commissioner, 91 T.C. 371, 393 (1988);
Beck v. Commissioner, 85 T.C. 557, 569 (1985).
While the focus of this test is on the subjective intent of
the taxpayer, objective criteria may also be used. See Independent
Elec. Supply, Inc. v. Commissioner, supra. Section 1.183-2(b),
Income Tax Regs., sets forth a nonexclusive list of factors to be
considered in determining whether an activity is engaged in or
carried on for profit. These factors are: (1) The manner in which
the taxpayer carried on the activity; (2) the expertise of the
taxpayer or his advisers; (3) the time and effort expended by the
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