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section 162, the activity must be conducted with “continuity and
regularity” and “the taxpayer’s primary purpose for engaging in
the activity must be for income or profit.” Commissioner v.
Groetzinger, 480 U.S. 23, 35 (1987).
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
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