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(2) certain additional expenses to the extent of the gross income
derived from the activity, less those deductions of the first
type.
A taxpayer must have an actual and honest profit objective
in order for an activity to be one which is for profit. Surloff
v. Commissioner, 81 T.C. 210, 233 (1983); Dreicer v.
Commissioner, 78 T.C. 642, 644 (1982), affd. without published
opinion 702 F.2d 1205 (D.C. Cir. 1983); sec. 1.183-2(a), Income
Tax Regs. This determination is made at the corporate level with
respect to the activities of an S corporation. Baldwin v.
Commissioner, T.C. Memo. 2002-162; sec. 1.183-1(f), Income Tax
Regs. However, we look to the intent of an S corporation’s sole
shareholder in deciding whether the corporation had the requisite
profit objective. Baldwin v. Commissioner, supra. In
determining whether the requisite intention to make a profit
exists, greater weight is given to objective facts than to the
taxpayer’s self-serving characterization of his intent. Id.;
Dreicer v. Commissioner, supra at 645; sec. 1.183-2(a), Income
Tax Regs. The regulations set forth a nonexclusive list of
factors to be considered in determining whether the taxpayer has
the requisite profit objective: (1) The manner in which the
taxpayer carries on the activity; (2) the expertise of the
taxpayer or his advisers; (3) the time and effort expended by the
taxpayer in carrying on the activity; (4) the expectation that
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