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ordinary and necessary to the conduct of the trade or business.
Paragraphs (1) and (2) of section 212 allow the taxpayer to
deduct expenses incurred in connection with an activity engaged
in for the production or collection of income, or for the
management, conservation, or maintenance of property held for the
production of income.
A taxpayer must show that he engaged in an activity with an
actual and honest objective of making a profit in order to deduct
expenses of the activity under either section 162 or 212.
Antonides v. Commissioner, 91 T.C. 686, 693 (1988), affd. 893
F.2d 656 (4th Cir. 1990); Beck v. Commissioner, 85 T.C. 557, 569
(1985); Dreicer v. Commissioner, 78 T.C. 642, 645 (1982), affd.
without opinion 702 F.2d 1205 (D.C. Cir. 1983); Golanty v.
Commissioner, 72 T.C. 411, 425 (1979), affd. without published
opinion 647 F.2d 170 (9th Cir. 1981). While the expectation of
making a profit need not be reasonable, the facts and
circumstances must indicate that the taxpayer entered into the
activity, or continued it, with the objective of making a profit.
Antonides v. Commissioner, supra at 694; Beck v. Commissioner,
supra, Dreicer v. Commissioner, supra; Golanty v. Commissioner,
supra at 425-426.
The question of whether a taxpayer engages in an activity
with the intention of making a profit is one of fact to be
resolved on the basis of all the surrounding facts and
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