Joe Guadagno and Susan Beth Rishel Guadagno - Page 10

                                        - 9 -                                         
          agree with respondent.                                                      
               The term “trade or business” is not precisely defined in               
          section 162 or the regulations promulgated thereunder; however,             
          it is well established that in order for an activity to be                  
          considered a taxpayer’s trade or business for purposes relevant             
          here, the activity must be conducted “with continuity and                   
          regularity” and “the taxpayer’s primary purpose for engaging in             
          the activity must be for income or profit.”  Commissioner v.                
          Groetzinger, 480 U.S. 23, 35 (1987).                                        
               The test for whether a taxpayer conducted an activity for              
          profit is whether he or she entered into, or continued, the                 
          activity with an actual or honest objective of making a profit.             
          See Keanini v. Commissioner, 94 T.C. 41, 46 (1990); Dreicer v.              
          Commissioner, 78 T.C. 642, 644-645 (1982), affd. without                    
          published opinion 702 F.2d 1205 (D.C. Cir. 1983); sec. 1.183-               
          2(a), Income Tax Regs.  The taxpayer’s profit objective for each            

               6(...continued)                                                        
                         (1) the deductions which would be allowable                  
               under this chapter for the taxable year without regard                 
               to whether or not such activity is engaged in for                      
               profit, and                                                            
                         (2) a deduction equal to the amount of the                   
               deductions which would be allowable under this chapter                 
               for the taxable year only if such activity were engaged                
               in for profit, but only to the extent that the gross                   
               income derived from such activity for the taxable year                 
               exceeds the deductions allowable by reason of paragraph                
               (1).                                                                   






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