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formative years of a business, "the goal must be to realize a
profit on the entire operation, which presupposes not only future
net earnings but also sufficient net earnings to recoup the
losses which have meanwhile been sustained in the intervening
years." Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965) affd.
379 F.2d 252 (2d Cir. 1967). Before going to Norway,
petitioner's drilling activity had been successful. Thus, when
petitioner returned from Norway in 1985, his expectation of
continued success in the drilling business was bona fide.
However, we simply are unable to impute a continuing profit
objective to petitioner, when he continued the activity that had
generated no revenue and incurred losses for a period of 6
consecutive years, without changing the manner in which he
carried it on. Petitioner’s continued lack of revenue and
resulting losses year after year, coupled with his failure to
change his approach or terminate the activity, supports the
inference that, by 1991, he had become indifferent to whether the
losing trend could be reversed. See Hendricks v. Commissioner,
32 F.3d 94 (4th Cir. 1994) affg. T.C. Memo. 1993-396.
While each case is unique, and we are not willing to place a
strict length-of-time requirement on when an activity is no
longer carried on for profit, we do not think that the profit
objective petitioner had in 1986 could have continued through
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