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this case is based on the record before the Court and not on
which party bears the burden of proof.
Petitioner’s Basketball Team Activity (RBS)
The first issue for decision is whether RBS was an activity
petitioner engaged in for profit within the meaning of section
183 during the years in issue.
Section 183(a) provides that if an individual engages in an
activity but does not engage in that activity for profit, “no
deduction attributable to such activity shall be allowed under
this chapter except as provided in this section.” In the case of
an activity not engaged in for profit, section 183(b)(1) allows
deductions which are otherwise allowable without regard to
whether the activity is engaged in for profit. Section 183(b)(2)
allows deductions that would be allowable if the activity were
engaged in for profit, but only to the extent of gross income
received from the activity. Section 183 defines an “activity not
engaged in for profit” as “any activity other than one with
respect to which deductions are allowable for the taxable year
under section 162 or under paragraph (1) or (2) of section 212.”
Section 162 allows a taxpayer to deduct ordinary and
necessary expenses of carrying on the taxpayer’s 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,
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