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paragraph (1) or (2) of section 212.” Deductions are allowed
under section 162 for the ordinary and necessary expenses of
carrying on an activity that constitutes the taxpayer’s trade or
business. Deductions are allowed under section 212 for expenses
paid or incurred in connection with an activity engaged in for
the production or collection of income or for the management,
conservation, or maintenance of property held for the production
of income. With respect to either section, however, the taxpayer
must demonstrate the requisite profit objective for the
activities in order to deduct associated expenses. See
Jasionowski v. Commissioner, 66 T.C. 312, 320-322 (1976); sec.
1.183-2(a), Income Tax Regs.
Whether the required profit objective exists is a question
of fact that must be determined on the basis of all of the facts
and circumstances of each case. 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. While the
focus of the test is on the subjective intention of the taxpayer,
greater weight is given to the objective facts than to the
taxpayer’s mere statement of his or her intent. See Independent
Elec. Supply, Inc. v. Commissioner, 781 F.2d 724, 726 (9th Cir.
1986), affg. T.C. Memo. 1984-472; Dreicer v. Commissioner, 78
T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205 (D.C.
Cir. 1983); Churchman v. Commissioner, 68 T.C. 696, 701 (1977);
sec. 1.183-2(a), Income Tax Regs.
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