Michael D. and Suzan L. Storer - Page 9

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          deductions attributable to an activity not engaged in for profit.           
          Section 183(b) provides two exceptions to this general rule.  The           
          first, provided by section 183(b)(1), permits deductions that               
          otherwise would be allowable without regard to whether the                  
          activity is engaged in for profit; the second, provided by                  
          section 183(b)(2), permits deductions that would be allowable if            
          the activity were engaged in for profit to the extent that the              
          gross income from the activity exceeds the deductions allowable             
          pursuant to section 183(b)(1).  Section 183(c) 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.”  In general, the Commissioner’s determination set             
          forth in the notice of deficiency is presumed correct.  Rule                
          142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).  In                
          certain circumstances the burden of proof shifts to respondent.             
          Sec. 7491(a)(1).  Petitioners do not contend that section 7491 is           
          applicable in this case, nor did they establish that the burden             
          of proof should shift to respondent.                                        
               Petitioners bear the burden of establishing that their                 
          photographic activity was engaged in for profit during the                  
          taxable years at issue.  Rule 142(a).  In satisfying this burden,           
          taxpayers must show that they had an actual and honest objective            
          of making a profit from the activity.  Dreicer v. Commissioner,             

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