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financial status, combined with the substantial amount of money
he expended in renovating the drill rig, weighs in favor of his
profit objective.
We conclude that petitioner was engaged in a trade or
business with regard to the drill rig during 1986, and is
entitled to the net operating loss carryover deducted in 1991.
Issue 2(a). Whether Petitioner Was Engaged in a Trade or
Business in 1991
Our finding that petitioner's activity constituted a trade
or business under section 162 in 1986 does not warrant a finding
that petitioner was engaged in a trade or business in 1991.
If an activity is one "not engaged in for profit", section
183(a) provides that "no deduction attributable to such activity
shall be allowed", except as otherwise provided in section
183(b).10 Petitioner has not persuaded us that he continued
to be engaged in a trade or business during 1991.
Our finding is based on the manner in which petitioner
carried on his activity from 1987 through 1990, including part of
1991. Because no one factor is determinative, we are most
persuaded by petitioner's continued dependence on techniques that
produced no revenue. While losses often occur during the
10First, sec. 183(b)(1) allows the full amount of those
deductions available without regard to the profit objective of
the activity. Then, sec. 183(b)(2) allows those deductions
normally permitted only if such activity was engaged in for
profit, but limits them to the amount by which the gross income
from that activity exceeds any deductions taken under sec.
183(b)(1).
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