The Oregon Tax Court held that the losses could be properly deducted if the taxpayer could show that they were engaged in a business for profit. The taxpayers in this case could not show that three of the four lines of products that they sold were businesses for profit, and those expenses could not be deducted. Deductions from a fourth product line were allowed because, although the losses were substantial, the circumstances suggested that the business was operated for profit, and not simply as a hobby. The taxpayers had limited resources, and a job loss precipitated the start of the business. These circumstances suggested a business for profit and not a hobby.

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