There is a presumption that the activity is "for profit" created in § 183(d) by the "three out of five year" rule. Gross income from the activity must exceed deductions from the activity in three out of the previous five years. If it does then the activity is likely presumed to be an activity engaged in for profit. The taxpayer must show a "primary, predominant, or principal purpose" of creating a profit.Prieto v. Commissioner, United States Tax Court, T.C. Memo. 2001-266, This topic is further explored in the 26 Code of Federal Regulations § 1.183-2
