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of section 212.” For deductions to be allowed under section 162
or section 212(1) or (2), taxpayers must establish that they
engaged in an activity with the actual and honest objective of
making an economic profit independent of tax savings. Antonides
v. Commissioner, 91 T.C. 686, 693-694 (1988), affd. 893 F.2d 656
(4th Cir. 1990); Dreicer v. Commissioner, 78 T.C. 642, 644-645
(1982), affd. without opinion 702 F.2d 1205 (D.C. Cir. 1983).
The expectation of profit need not have been reasonable; however,
taxpayers must have entered into the activity, or continued it,
with the objective of making a profit. Hulter v. Commissioner,
91 T.C. 371, 393 (1988); sec. 1.183-2(a), Income Tax Regs.
Whether the requisite profit motive exists is determined by
evaluating all surrounding facts and circumstances. Keanini v.
Commissioner, 94 T.C. 41, 46 (1990); sec. 1.183-2(b), Income Tax
Regs. Greater weight is given to objective facts than to
taxpayers’ self-serving statements of intent. Westbrook v.
Commissioner, 68 F.3d 868, 875-876 (5th Cir. 1995), affg. T.C.
Memo. 1993-634; sec. 1.183-2(a), Income Tax Regs. Taxpayers bear
the burden of proving that they engaged in the activity with the
intent of making a profit.2 Rule 142(a).
Section 1.183-2(b), Income Tax Regs., contains a
nonexclusive list of factors to be used in determining whether an
2 We do not find that the burden shifting provisions of sec.
7491 apply.
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