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taxable year in the production or collection of income. Sec.
212(1). Section 167 allows a depreciation deduction for property
used in a trade or business or held for the production of income
if the expenses were incurred with a legitimate for-profit
activity. Sec. 167(a); Hulter v. Commissioner, 91 T.C. 371, 392
(1988).
Under section 183(a), no deductions attributable to the
Amway activity are allowable unless the activity is engaged in
for profit, except as provided in section 183(b). Sec. 183(a);
Elliott v. Commissioner, 90 T.C. at 960; Dreicer v. Commissioner,
78 T.C. 642, 643 (1982), affd. without published opinion 702 F.2d
1205 (D.C. Cir. 1983). Petitioners must have entered into or
continued the Amway activity with the actual, honest, and bona
fide objective of making a profit. Filios v. Commissioner, 224
F.3d 16 (1st Cir. 2000), affg. T.C. Memo. 1999-92; Hulter v.
Commissioner, supra at 392-393; Beck v. Commissioner, 85 T.C.
557, 569 (1985); Dreicer v. Commissioner, supra at 645; sec.
1.183-2(a), Income Tax Regs.
An activity that is “not engaged in for profit” means any
activity other than one with respect to which deductions are
allowable for the taxable year under section 162 or section
212(1) or 212(2). Sec. 183(c); sec. 1.183-2(a), Income Tax Regs.
The following nonexclusive factors are relevant in
determining whether an activity is engaged in for profit: The
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Last modified: May 25, 2011