Internal Revenue Code · 26 U.S.C.
§ 183. Activities not engaged in for profit
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 183
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- December 30, 1969 by Pub. L. 91–172
- Last amended
- December 19, 2014 by Pub. L. 113–295
- Amendments
- 6 dated changes in the source credit
- Length
- 5 subsections · 706 words · about 3 min to read
- Defines
- 1 term
- Cross-references
- cites 2; cited by 2 Code sections and 15 other regulations
- Regulations
- 3 issued under this section
In the case of an activity engaged in by an individual or an S corporation, 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.
For purposes of this section, the term “activity not engaged in for profit” means 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.
If the gross income derived from an activity for 3 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 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 “2” for “3” and “7” for “5”.
A determination as to whether the presumption 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.
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 taxpayer first engages in the activity, if the gross income derived from the activity for 3 (or 2 if applicable) 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).
An election under paragraph (1) shall be made at such time and manner, and subject to such terms and conditions, as the Secretary may prescribe.
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 last 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.
(Added Pub. L. 91–172, title II, § 213(a), Dec. 30, 1969, 83 Stat. 571; amended Pub. L. 92–178, title III, § 311(a), Dec. 10, 1971, 85 Stat. 525; Pub. L. 94–455, title II, § 214(a), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1549, 1834; Pub. L. 97–354, § 5(a)(23), Oct. 19, 1982, 96 Stat. 1694; Pub. L. 99–514, title I, § 143(a), Oct. 22, 1986, 100 Stat. 2120; Pub. L. 100–647, title I, § 1001(h)(3), Nov. 10, 1988, 102 Stat. 3352; Pub. L. 113–295, div. A, title II, § 221(a)(36), Dec. 19, 2014, 128 Stat. 4042.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 183
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 2 other sections
Cited by 2 Code sections
- § 280A(f)(3) Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc.
- § 6212(c)(2)(C) Notice of deficiency
Cited in 15 regulations not issued under it
- § 1.42-0 Table of contents.
- § 1.42-4 Application of not-for-profit rules of section 183 to low-income housing credit activities.
- § 1.162-12 Expenses of farmers.
- § 1.179-2 Limitations on amount subject to section 179 election.
- § 1.212-1 Nontrade or nonbusiness expenses.
- § 1.270-1 Limitation on deductions allowable to individuals in certain cases.
- § 1.702-1 Income and credits of partner.
- § 1.1251-3 Definitions relating to section 1251.
- § 1.1366-1 Shareholder's share of items of an S corporation.
- § 12.9 Election to postpone determination with respect to the presumption described in section 183(d).
- § 301.6231(a)(3)-1 Partnership items.
- § 301.6404-0 Table of contents.
- § 301.6404-4 Suspension of interest and certain penalties when the Internal Revenue Service does not timely contact the taxpayer.
- § 301.6621-2T Questions and answers relating to the increased rate of interest on substantial underpayments attributable to certain tax motivated transactions (temporary).
- § 301.9100-21 References to other temporary elections under various tax acts.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 113–295Parts changed in 2014: (e)(1)
- Amended by Pub. L. 100–647Parts changed in 1988: (e)(2)
- Amended by Pub. L. 99–514Parts changed in 1986: (d)
- Amended by Pub. L. 97–354Parts changed in 1982: (a)
- Amended by Pub. L. 94–455Parts changed in 1976: (d) (e)(4)
- Amended by Pub. L. 92–178Parts changed in 1971: (e)
- Added by Pub. L. 91–172
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter B Computation of Taxable Income
- Part VI ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
Nearby sections
- § 179E Election to expense advanced mine safety equipment
- § 180 Expenditures by farmers for fertilizer, etc.
- § 181 Treatment of certain qualified productions
- § 182 Repealed
- § 183 Activities not engaged in for profit
- § 184 Repealed
- § 185 Repealed
- § 186 Recoveries of damages for antitrust violations, etc.
- § 187 Repealed
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
2014—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.
1988—Subsec. (e)(2). Pub. L. 100–647 substituted “activity for 3 (or 2 if applicable)” for “activity for 2”.
1986—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.
1982—Subsec. (a). Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”.
1976—Subsecs. (d), (e)(3). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (e)(4). Pub. L. 94–455, § 214(a), added par. (4).
1971—Subsec. (e). Pub. L. 92–178 added subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
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.
Effective Date of 1988 Amendment
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1986 Amendment
Amendment by Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. L. 99–514, set out as a note under section 1 of this title.
Effective Date of 1982 Amendment
Amendment by Pub. L. 97–354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97–354, set out as an Effective Date note under section 1361 of this title.
Effective Date of 1976 Amendment
Pub. L. 94–455, title II, § 214(c), Oct. 4, 1976, 90 Stat. 1549, provided that: “The amendments made by this section [amending this section and section 6212 of this title] shall apply with respect to taxable years beginning after December 31, 1969; except that such amendments shall not apply to any taxable year ending before the date of the enactment of this Act [Oct. 4, 1976] with respect to which the period for assessing a deficiency has expired before such date of enactment.”
Effective Date of 1971 Amendment
Pub. L. 92–178, title III, § 311(b), Dec. 10, 1971, 85 Stat. 526, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1969.”
Effective Date
Pub. L. 91–172, title II, § 213(d), Dec. 30, 1969, 83 Stat. 572, provided that: “The amendments made by this section [enacting this section, amending section 6504 of this title, and repealing section 270 of this title] shall apply to taxable years beginning after December 31, 1969.”