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For the following reasons, we 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 the 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
8(...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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