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If an activity of a taxpayer is not conducted for profit,
section 183(a) disallows all deductions related thereto, except
as provided by section 183(b). As relevant here, an activity is
not conducted for profit if it is one with respect to which
deductions are not allowable under section 162(a). Sec. 183(c).
If an activity of a taxpayer is not conducted for profit, section
183(b) allows the taxpayer to deduct (1) expenses which otherwise
would have been allowable without regard to profit motive, and
(2) certain additional expenses to the extent of the gross income
derived from the activity, less those deductions of the first
type.
The test to determine whether a taxpayer conducted an
activity for profit is whether he or she engaged in the activity
with an actual and honest objective of earning a profit. Keanini
v. Commissioner, 94 T.C. 41, 46 (1990); Dreicer v. Commissioner,
78 T.C. 642, 644-645 (1982), affd. without opinion 702 F.2d 1205
(D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs. Although a
reasonable expectation of profit is not required, the taxpayer’s
profit objective must be bona fide, as determined from a
consideration of all the facts and circumstances. Keanini v.
Commissioner, supra; Dreicer v. Commissioner, supra at 645;
Golanty v. Commissioner, 72 T.C. 411, 425-426 (1979), affd.
without published opinion 647 F.2d 170 (9th Cir. 1981); Bessenyey
v. Commissioner, 45 T.C. 261, 274 (1965), affd. 379 F.2d 252 (2d
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