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for profit, no deduction attributable to such activity shall be
allowed under this chapter except as provided in this section.”
Deductions that would be allowable without regard to whether the
activity is engaged in for profit shall be allowed under section
183(b)(1), and deductions that would be allowable only if the
activity is engaged in for profit shall be allowed under section
183(b)(2), but only to the extent that the gross income from the
activity exceeds the deductions allowable under section
183(b)(1).
We begin with the burden of proof. In general, the
Commissioner’s determinations in the deficiency notice are
presumed correct, and the taxpayer bears the burden of proving
that the Commissioner’s determinations are in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Petitioner
did not assert that the burden shifted to respondent under
section 7491. We therefore treat petitioner as having conceded
this issue and find that the burden remains with petitioner.
We follow the Court of Appeals opinion squarely on point
when appeal from our decision would lie to that court absent
stipulation by the parties to the contrary. Golsen v.
Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.
1971). A taxpayer residing in the Eighth Circuit, such as
petitioner, must prove he or she conducted the activity with an
actual and honest objective of making a profit. See Evans v.
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