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deductions attributable to the activity to the extent of gross
income generated by the activity. See sec. 183(b).
The test for determining whether an individual is carrying
on an activity for profit is whether the taxpayer's actual and
honest objective in engaging in the activity is to make a profit.
See Osteen v. Commissioner, 62 F.3d 356, 358 (11th Cir. 1995),
affg. in part and revg. in part T.C. Memo. 1993-519; Surloff v.
Commissioner, 81 T.C. 210, 233 (1983); Dreicer v. Commissioner,
78 T.C. 642, 645 (1982), affd. without published opinion 702 F.2d
1205 (D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs. While a
taxpayer's expectation of profit need not be reasonable, there
must be a good-faith expectation of making a profit. See Allen
v. Commissioner, 72 T.C. 28, 33 (1979); sec. 1.183-2(a), Income
Tax Regs.
Section 1.183-2(b), Income Tax Regs., provides a
nonexclusive list of factors to be considered in determining
whether an activity is engaged in for profit. Those factors
include: (1) The manner in which the taxpayer carried on the
activity; (2) the expertise of the taxpayer or his advisors; (3)
the time and effort expended by the taxpayer in carrying on the
activity; (4) the expectation that assets used in the activity
may appreciate in value; (5) the success of the taxpayer in
carrying on other similar or dissimilar activities; (6) the
taxpayer's history of income or loss with respect to the
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