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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable year in
issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
In general, section 162(a) allows a deduction for all
ordinary and necessary expenses paid or incurred during the
taxable year in carrying on a trade or business. The term "trade
or business" is not defined with particularity in the Internal
Revenue Code or the regulations promulgated thereunder for
purposes of section 162. However, it is well established that to
be involved in a trade or business within the meaning of section
162, "the taxpayer must be involved in the activity with
continuity and regularity and * * * the taxpayer's primary
purpose for engaging in the activity must be for income or
profit." Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987).
The test of whether a taxpayer conducted an activity for
profit is whether he or she engaged in the activity with an
actual and honest objective of earning a profit. See Keanini v.
Commissioner, 94 T.C. 41, 46 (1990); Dreicer v. Commissioner, 78
T.C. 642, 644-645 (1982), affd. without published opinion 702
F.2d 1205 (D.C. Cir. 1983); 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, as determined from
a consideration of all the facts and circumstances. See Keanini
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