James J. Hogan - Page 7




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          income.”  A review of the record proves this to be an accurate              
          assessment.  In addition, during 1996 and 1997, petitioner owned            
          no beef cattle, reported no income from beef cattle, yet claimed            
          losses of $1,384 and $1,065 from beef cattle on his Schedules F.            
          For 1997, petitioner claimed $824 additional losses on a second             
          Schedule C from an alleged wood working activity.  Petitioner’s             
          use of various schedules on his returns shows that he had learned           
          to use them as a tax cash cow.                                              
               Section 183(a) disallows any deduction attributable to                 
          activities not engaged in for profit except as provided under               
          section 183(b).  Section 183(b)(1) allows those deductions which            
          otherwise are allowable regardless of profit objective.  Section            
          183(b)(2) allows those deductions which would be allowable if the           
          activity were 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.”            
               The basic standard for determining whether an expense is               
          deductible under section 162 and 212 (and thus not subject to the           
          limitations of section 183) is the following:  a taxpayer must              
          show that he or she engaged in or carried on the activity with an           
          actual and honest objective of making a profit.  Ronnen v.                  






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