22
After considering the entire record, we hold that petitioner
did not engage in the activity of metal mining and refining
during 1990 with the bona fide objective of making a profit.
Other than his self-serving testimony, we find that petitioner
did not present any evidence that supported his position that he
had an actual and honest objective of making a profit from his
metal mining and refining activity. Petitioner, based on his
losses, should have been aware that the activity was either
incapable of generating a profit or that his performance and
assumptions were seriously flawed. However, the record does not
show that petitioner had a business plan to stem or assuage the
losses. Hence, we find that petitioner has failed to carry his
burden of proving that he engaged in that activity with a profit
objective.
We hold that petitioner was not engaged in an activity for
profit under section 183. Accordingly, we sustain respondent on
this issue.
Failure to File
Finally, we decide whether petitioner is liable for the
addition to tax under section 6651(a)(1) for failure to file a
timely return. Section 6651(a)(1) provides for an addition to
tax of 5 percent of the amount of income tax required to be shown
on the return if such failure to file is for not more than 1
month, with an additional 5 percent for each month such failure
continues, not to exceed 25 percent. The addition to tax under
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