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Petitioner agrees that there were personal and recreational
benefits to the cross-country travel. The record clearly shows
that the travel was a vacation trip. Petitioner enjoys writing
and does so without regard to profit or loss. We conclude that,
during the year in issue, petitioner’s writing activity was not
engaged in for profit within the meaning of section 183.
Conclusion
The filing of a Schedule C was an afterthought to
petitioners. Petitioner admits that he had never filed a
Schedule C prior to the year in issue, and that the reason he
decided to file a Schedule C for the year in issue was so that he
could deduct the travel expenses from his trip.
Because petitioner’s writing and handyman activities were
not engaged in for profit, petitioners may not deduct the
expenses of the activities under either section 162(a) or section
212. Rather, their deductions are limited to those allowed by
section 183. Section 183(b)(2) allows petitioners to offset
expenses against any income generated by an activity, despite the
fact that the activity is not an activity engaged in for profit.
On their Schedule C for 1997 petitioners claimed gross income of
$370 and total expenses of $13,102. Accordingly, $12,732 of
petitioners’ expenses are not deductible. In the notice of
deficiency, respondent disallowed petitioners’ total expenses of
$13,102, instead of disallowing only the $12,732 that petitioners
deducted as a business loss.
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