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claimed for mortgage interest for lack of substantiation. With
respect to the 1996 Schedule A deductions, respondent disallowed
$6,817 of the $7,879 claimed for medical expenses for lack of
substantiation. Respondent also determined that petitioners are
liable for penalties under section 6662(a) for the years in
issue.
Discussion
1. Mayo’s Auto Sales
Section 162(a) allows a deduction for ordinary and necessary
expenses paid or incurred in carrying on a trade or business.
Generally, under section 183(a) and (b) an individual is not
allowed deductions attributable to an activity “not engaged in
for profit” except to the extent of gross income generated by the
activity. Section 183(c) defines an activity “not engaged in for
profit” as any activity other than one for which deductions are
“allowable * * * under section 162 or under paragraph (1) or (2)
of section 212.” Essentially the test for determining whether an
activity is engaged in for profit is whether the taxpayer engages
in the activity with the primary objective of making a profit.
See Antonides v. Commissioner, 893 F.2d 656, 659 (4th Cir. 1990),
affg. 91 T.C. 686 (1988). Although the expectation need not be
reasonable, the expectation must be bona fide. See Hulter v.
Commissioner, 91 T.C. 371, 393 (1988). Furthermore, in resolving
the question, greater weight is given to the objective facts than
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