Taxpayers who seek to claim deductions for ordinary and necessary expenses paid or incurred in carrying on a trade or business or for the production or collection of income or for the management, conservation, or maintenance of property held for the production of income must show a profit motive.

Without a profit motive behind the activity, in general, a taxpayer is barred from claiming deductions for activities not engaged in for profit under Section 183(a) of the Internal Revenue Code.

The big issue is whether an activity is a trade or business (or one for investment) or is rather merely a hobby.

A recent Tax Court case illustrates the difference between a profit motive and a hobby.