ACTIVITIES NOT ENGAGED IN FOR PROFIT.

SEC. 311. ACTIVITIES NOT ENGAGED IN FOR PROFIT. (a) Application of Statutory Presumption—Section 183 (relating to 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-85 Stat. 526 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.” (b) Effective Date—The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1969.