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The issues for decision are: (1) Whether a gold mining and
treasure salvaging activity1 was not engaged in for profit by
petitioner2 and thus, losses claimed in connection with this
activity were not deductible under section 183;3 (2) if the
activity was engaged in for profit, whether the losses constitute
nondeductible passive activity losses under section 469; (3)
whether a loss from rental property was properly disallowed as a
passive activity loss pursuant to section 469; and (4) whether
petitioners are subject to the accuracy-related penalty under
section 6662 due to an underpayment of tax attributable to
negligence or an intentional disregard of rules or regulations,
or a substantial understatement of income tax. Respondent does
not argue that any of the losses should be disallowed for failure
to substantiate, nor does she argue that petitioner's
expenditures were in effect contributions by petitioner to the
capital of the treasure hunting venture; thus, we will not
consider these issues.
1 It was conceded at trial that all of the gold mining and
treasure salvaging (also referred to as treasure hunting)
operations constituted one activity for purposes of sec. 183 and
sec. 469.
2 All references to “petitioner” in the singular refer to
Frederick G. Harrison.
3 All section references are to the Internal Revenue Code
in effect for the year in issue, and all Rule references are to
the Tax Court Rules of Practice and Procedure.
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