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Petitioner had worked full time in his drilling operation
from 1978 through 1981. From 1981 through 1984, during the
period petitioner was working for Mobil, he returned to Alaska 4
to 6 weeks each year, during which time he worked on his drilling
equipment and corresponded with potential clients. In 1982,
petitioner earned income from the use of his drill rig.
In 1986, petitioner had no outside employment and did no
work other than his drilling activity. Petitioner claims to have
devoted 3,285 hours to his drilling operation in 1986, which
amounts to more than 80 hours per week. Even one-half of the
hours claimed by petitioner would amount to a work week for the
average individual during this year.
We deem it unnecessary to decide whether petitioner's drill
rig activities in 1985-86 were a continuation or reactivation of
his 1978-81 trade or business, or an attempt to start a new
business, with the old business of 1978-81 having been terminated
by petitioner's full time employment overseas with Mobil. We
conclude that, during the year 1986, petitioner engaged in the
drilling activity for profit. Commissioner v. Groetzinger, 480
U.S. 23, 35 (1987).
Respondent argues that the losses incurred by petitioner in
both of the years at issue, as well as the intervening years,
petitioner's lack of formal operating statements or records, and
the recreational benefit derived by petitioner from his drilling
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