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appeal in this case would lie, has held that for a deduction to
be allowed under section 162 or section 212(1) or (2), a taxpayer
must establish that he engaged in the activity with the primary,
predominant, or principal purpose and intent of realizing an
economic profit independent of tax savings. See Wolf v.
Commissioner, 4 F.3d 709, 713 (9th Cir. 1993), affg. T.C. Memo.
1991-212; Indep. Elec. Supply, Inc. v. Commissioner,
781 F.2d 724, 726 (9th Cir. 1986), affg. Lahr v. Commissioner,
T.C. Memo. 1984-472.
The expectation of profit need not have been reasonable, but
it must be bona fide. See Golanty v. Commissioner, 72 T.C. 411,
426 (1979), affd. without published opinion 647 F.2d 170 (9th
Cir. 1981); sec. 1.183-2(a), Income Tax Regs. Whether the
requisite profit objective exists is determined by looking to all
the surrounding facts and circumstances. Golanty v.
Commissioner, supra at 426; sec. 1.183-2(b), Income Tax Regs.
Greater weight is given to objective facts than to a taxpayer's
mere after-the-fact statement of intent. Indep. Elec. Supply,
Inc. v. Commissioner, supra; Thomas v. Commissioner, 84 T.C.
1244, 1269 (1985), affd. 792 F.2d 1256 (4th Cir. 1986); sec.
1.183-2(a), Income Tax Regs. Petitioners bear the burden of
proof. Rule 142(a).5
5 Cf. sec. 7491(a), effective for court proceedings arising
in connection with examinations commencing after July 22, 1998.
(continued...)
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