James Tinnell - Page 18

                                       - 18 -                                         
          During this period, petitioner spent most of his time and effort            
          on his mining activities and relatively little time maintaining             
          his medical practice.                                                       
          I.   Section 183(a) Deductions                                              
               A.  In General                                                         
               Section 183(a) provides that if an activity is not engaged             
          in for profit, no deduction attributable to the activity shall be           
          allowed except as provided in section 183(b).  Section 183(b)(1)            
          allows those deductions that otherwise are allowable regardless             
          of profit objective.  Section 183(b)(2) allows those deductions             
          that would be allowable if the activity was engaged in for                  
          profit, but only to the extent that gross income attributable to            
          the activity exceeds the deductions permitted by section                    
          183(b)(1).  Section 183(c) defines “activity not engaged in for             
          profit” as “any activity other than one with respect to which               
          deductions are allowable for the taxable year under section 162             
          or under paragraph (1) or (2) of section 212.”                              
               Deductions are allowable under section 162 for the expenses            
          of carrying on an activity that constitutes a trade or business             
          of the taxpayer.  See sec. 162(a); sec. 1.183-2(a), Income Tax              
          Regs.  To be engaged in a trade or business with respect to which           
          deductions are allowable under section 162, “the taxpayer must be           
          involved in the activity with continuity and regularity,” and               

Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011