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circumstance that prevented petitioner from obtaining a profit in
this activity. Sec. 1.183-2(b)(6), Income Tax Regs.
The fact remains that petitioner had zero net income from
his metal mining and refining activity in 1990, and this was a
7-year trend. The cost of goods sold has diverged over the years
but, in general, there is a decrease. Finally, petitioner’s
gross income steadily declined leading up to 1990 while expenses
remained relatively stable. Furthermore, we notice that
petitioner’s expenses were not demonstrably affected by the
cessation of the activity of selling mercury in 1988. Hence, we
believe that the shortfall was not due to the dispute with DHS,
but, rather, that the activity itself could not reasonably be
expected to result in a profit, and because petitioner took no
measures to reduce his expenditures for unprofitable activities.
7. The Amount of Occasional Profits Earned, if Any
The record demonstrates profitability only in 4 of the
earliest of 14 years. The 7 years up to and including 1990
demonstrate consistent losses similar in magnitude.
8. The Financial Status of the Taxpayer
The metal mining and refining activity was profitable only
in the first few years. All subsequent years show losses of a
considerable scope. Also, there existed no financial pressure or
incentive on petitioner to pursue work that was consistently
profitable. In fact, the support of petitioner’s parents and
wife allowed petitioner to sustain the losses incurred in the
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