§ 183. Activities not engaged in for profit

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 title II § 213(a) · 83 Stat. 487

   Enacted · 26 U.S.C. § 183

   Added Pub. L. 91–172, title II, § 213(a), Dec. 30, 1969, 83 Stat. 571

   Source evidence

   Code source credit
   Added Pub. L. 91–172, title II, § 213(a), Dec. 30, 1969, 83 Stat. 571

   Enacted provision · exact public law section
   (a) General Rule.— Part VI of subchapter B of chapter 1 (relating 26 USC 161–182. to itemized deductions for individuals and corporations) amended by adding at the end thereof the following new section: “SEC. 183. ACTIVITIES NOT ENGAGED IN FOR PROFIT. “(a) General Rule.— In the case of an activity engaged in by an individual or an electing small business corporation (as defined in section 1371(b)), if such activity is not engaged in for profit, no deduction attributable to such activity shall be allowed under this chapter except as provided in this section. “(b) Deductions Allowable.— In the case of an activity not engaged in for profit to which subsection (a) applies, there shall be allowed— “(1) the deductions which would be allowable under this chapter for the taxable year without regard to whether or not such activity is engaged in for profit, and “(2) a deduction equal to the amount of the deductions which would be allowable under this chapter for the taxable year only if such activity were engaged in for profit, but only to the extent that the gross income derived from such activity for the taxable year exceeds the deductions allowable by reason of paragraph (1). “(c) Activity Not Engaged in for Profit Defined.— For purposes of this section, the term ‘activity not engaged in for profit’ means any activity other than one with respect to which deductions Post, p. 710. 68A Stat. 69. are allowable for the taxable year under section 162 or under paragraph (1) or (2) of section 212. “(d) Presumption.— If the gross income derived from an activity for 2 or more of the taxable years in the period of 5 consecutive taxable years which ends with the taxable year exceeds the deductions attributable to such activity (determined without regard to whether or not such activity is engaged in for profit), then, unless the Secretary or his delegate establishes to the contrary, such activity shall be presumed for purposes of this chapter for such taxable year to be an activity engaged in for profit. In the case of an activity which consists in major part of the breeding, training, showing, or racing of horses, the preceding sentence shall be applied by substituting the period of 7 consecutive taxable years for the period of 5 consecutive taxable years.”

2. 1971

   Revenue Act of 1971

   Pub. L. 92–178 title III § 311(a) · 85 Stat. 494

   Added · 26 U.S.C. § 183(e)

   Pub. L. 92–178 added subsec. (e)

   Source evidence

   Code amendment note
   Subsec. (e). Pub. L. 92–178 added subsec. (e).

   Enacted provision · exact public law section
   (a) Application of Statutory Presumption— Section 183 (relating to 83 Stat. 571. activities not engaged in for profit) is amended by adding at the end thereof the following new subsection: “(e) Special Rule— “(1) In general— A determination as to whether the presump- tion provided by subsection (d) applies with respect to any activity shall, if the taxpayer so elects, not be made before the close of the fourth taxable year (sixth taxable year, in the case of an activity described in the last sentence of such subsection) following the taxable year in which the taxpayer first engages in the activity. For purposes of the preceding sentence, a taxpayer shall be treated as not having engaged in an activity during any taxable year beginning before January 1, 1970. “(2) Initial period.— If the taxpayer makes an election under paragraph (1), the presumption provided by subsection (d) shall apply to each taxable year in the 5-taxable year (or 7-taxable year) period beginning with the taxable year in which the tax-payer first engages in the activity, if the gross income derived from the activity for 2 or more of the taxable years in such period exceeds the deductions attributable to the activity (determined without regard to whether or not the activity is engaged in for profit). “(3) Election— An election under paragraph (1) shall be made at such time and manner, and subject to such terms and conditions, as the Secretary or his delegate may prescribe.”

3. 1976

   Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520

   Struck · 26 U.S.C. § 183(d); 26 U.S.C. § 183(e)(3)

   Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”

   Source evidence

   Code amendment note
   Subsecs. (d), (e)(3). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

   Enacted provision · exact public law section
   (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.

4. 1976

   Pub. L. 94–455 § 214(a) · 90 Stat. 1520

   Added · 26 U.S.C. § 183(e)(4)

   Pub. L. 94–455, § 214(a), added par. (4)

   Source evidence

   Code amendment note
   Subsec. (e)(4). Pub. L. 94–455, § 214(a), added par. (4).

   Enacted provision · exact public law section
   (a) In General.— Subsection (e) of section 183 (relating to special 26 USC 183. rule for activities not engaged in for profit) is amended by adding at the end thereof the following new paragraph: “(4) Time for assessing deficiency attributable to activity.— If a taxpayer makes an election under paragraph (1) with respect to an activity, the statutory period for the assessment of any deficiency attributable to such activity shall not expire before the expiration of 2 years after the date prescribed by law (determined without extensions) for filing the return of tax under chapter 1 for the hist taxable year in the period of 5 taxable years (or 7 taxable years) to which the election relates. Such deficiency may be assessed notwithstanding the provisions of any law or rule of law which would otherwise prevent such an assessment.”.

5. 1982

   Subchapter S Revision Act of 1982

   Pub. L. 97–354 § 5(a)(23) · 96 Stat. 1669

   Substituted · 26 U.S.C. § 183(a)

   Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”.

   Enacted provision · exact public law section
   (23) Section 183(a).— Subsection (a) of section 183 (relating to 26 USC 183. activities not engaged in for profit) is amended by striking out “an electing small business corporation (as defined in section 1371(b))” and inserting in lieu thereof “an S corporation”.

6. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 title I § 143(a) · 100 Stat. 2085

   1. Substituted · 26 U.S.C. § 183(d)

      Pub. L. 99–514 substituted “3” for “2” in second sentence

   2. Substituted · 26 U.S.C. § 183(d)

      Pub. L. 99–514 substituted “ ‘2’ for ‘3’ and ‘7’ for ‘5’ ” for “the period of 7 consecutive taxable years for the period of 5 consecutive taxable years” in second sentence

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 99–514 substituted “3” for “2” before “or more” in first sentence and “ ‘2’ for ‘3’ and ‘7’ for ‘5’ ” for “the period of 7 consecutive taxable years for the period of 5 consecutive taxable years” in second sentence.

   Enacted provision · exact public law section
   (a) Hobby Loss.— Subsection (d) of section 183 (relating to presumption) is amended— (1) by striking out “2 or more of the taxable years in the period of 5 consecutive taxable years” and inserting in lieu thereof “3 or more of the taxable years in the period of 5 consecutive taxable years”, and (2) by striking out the last sentence and inserting in lieu thereof the following: “In the case of an activity which consists in major part of the breeding, training, showing, or racing of horses, the preceding sentence shall be applied by substituting ‘2’ for ‘3’ and ‘7’ for ‘5’.”

7. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 title I § 1001(h)(3) · 102 Stat. 3342

   Substituted · 26 U.S.C. § 183(e)(2)

   Pub. L. 100–647 substituted “activity for 3 (or 2 if applicable)” for “activity for 2”

   Source evidence

   Code amendment note
   Subsec. (e)(2). Pub. L. 100–647 substituted “activity for 3 (or 2 if applicable)” for “activity for 2”.

   Enacted provision · exact public law section
   (3) Section 183(e)(2) of the 1986 Code is amended by striking out “2” “2” “2” and inserting in lieu thereof “3 (or 2 if applicable)”.

8. 2014

   Tax Technical Corrections Act of 2014

   Pub. L. 113–295 div. A title II § 221(a)(36) · 128 Stat. 4010

   Struck · 26 U.S.C. § 183(e)(1)

   Pub. L. 113–295 struck out “For purposes of the preceding sentence, a taxpayer shall be treated as not having engaged in an activity during any taxable year beginning before January 1, 1970.” at end

   Source evidence

   Code amendment note
   Subsec. (e)(1). Pub. L. 113–295 struck out “For purposes of the preceding sentence, a taxpayer shall be treated as not having engaged in an activity during any taxable year beginning before January 1, 1970.” at end.

   Enacted provision · exact public law section
   (36) Activities not engaged in for profit.— Section 183(e)(1) is amended by striking the last sentence.

   Effective date note
   Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

9 of 9 references resolved to an enrolled provision