Robert H. Goode, Jr. and Lockie L. Goode - Page 7




                                       - 6 -                                          
                                    Discussion                                        
             Section 183 precludes deductions for activities not engaged              
        in for profit except to the extent of the gross income derived                
        from those activities.  Sec. 183(a) and (b)(2).  Thus, deductions             
        are not allowable for activities that a taxpayer carries on                   
        primarily for sport, as a hobby, or for recreation.  Sec. 1.183-              
        2(a), Income Tax Regs.  For a taxpayer’s expenses in an activity              
        to be deductible under section 162, entitled “Trade or Business               
        Expenses”, or section 212, entitled “Expenses for Production of               
        Income”, and not subject to the limitations of section 183, a                 
        taxpayer must show that the taxpayer engaged in the activity with             
        an actual and honest objective of making a profit.  Hulter v.                 
        Commissioner, 91 T.C. 371, 392 (1988); Dreicer v. Commissioner, 78            
        T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205 (D.C.               
        Cir. 1983); Hastings v. Commissioner, T.C. Memo. 2002-310.                    
        Whether a taxpayer has an actual and honest profit objective is a             
        question of fact to be answered from all the relevant facts and               
        circumstances.  Hulter v. Commissioner, supra at 393; Hastings v.             
        Commissioner, supra; sec. 1.183-2(a), Income Tax Regs.  Greater               
        weight is given to objective facts than to a taxpayer’s mere                  
        statement of intent.  Dreicer v. Commissioner, supra at 645; sec.             
        1.183-2(a), Income Tax Regs.                                                  
             The regulations set forth a nonexhaustive list of factors                
        that may be considered in deciding whether a taxpayer had a profit            







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