Mark Massingill and Indra Massingill - Page 20

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          circumstance that prevented petitioner from obtaining a profit in           
          this activity.  Sec. 1.183-2(b)(6), Income Tax Regs.                        
               The fact remains that petitioner had zero net income from              
          his metal mining and refining activity in 1990, and this was a              
          7-year trend.  The cost of goods sold has diverged over the years           
          but, in general, there is a decrease.  Finally, petitioner’s                
          gross income steadily declined leading up to 1990 while expenses            
          remained relatively stable.  Furthermore, we notice that                    
          petitioner’s expenses were not demonstrably affected by the                 
          cessation of the activity of selling mercury in 1988.  Hence, we            
          believe that the shortfall was not due to the dispute with DHS,             
          but, rather, that the activity itself could not reasonably be               
          expected to result in a profit, and because petitioner took no              
          measures to reduce his expenditures for unprofitable activities.            
               7.  The Amount of Occasional Profits Earned, if Any                    
               The record demonstrates profitability only in 4 of the                 
          earliest of 14 years.  The 7 years up to and including 1990                 
          demonstrate consistent losses similar in magnitude.                         
               8.  The Financial Status of the Taxpayer                               
               The metal mining and refining activity was profitable only             
          in the first few years.  All subsequent years show losses of a              
          considerable scope.  Also, there existed no financial pressure or           
          incentive on petitioner to pursue work that was consistently                
          profitable.  In fact, the support of petitioner’s parents and               
          wife allowed petitioner to sustain the losses incurred in the               




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