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thereto are allowable only to the extent gross income derived
from the activity exceeds deductions allowable under section
183(b)(1) without regard to whether the activity constitutes a
for-profit activity. See Allen v. Commissioner, 72 T.C. 28, 33
(1979).
For purposes of section 183, an activity is not considered
engaged in for profit unless it is conducted by the taxpayer with
an actual and honest objective of making a profit. See
Hildebrand v. Commissioner, 28 F.3d 1024, 1027 (10th Cir. 1994),
affg. Krause v. Commissioner, 99 T.C. 132 (1992); Antonides v.
Commissioner, 91 T.C. 686, 693-694, 696-697 (1988), affd. 893
F.2d 656 (4th Cir. 1990); Dreicer v. Commissioner, 78 T.C. 642,
645-646 (1982), affd. without opinion 702 F.2d 1205 (D.C. Cir.
1983). Petitioners have the burden of proof. See Rule 142(a);
Cannon v. Commissioner, 949 F.2d 345, 348-349 (10th Cir. 1991),
affg. T.C. Memo. 1990-148.
The regulations under section 183 provide a nonexclusive
list of factors to be considered in determining whether an
activity is engaged in for profit. The 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 the taxpayer expended in carrying on the activity; (4) the
expectation that assets used in the activity may appreciate in
value; (5) the taxpayer’s success in carrying on other
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