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no record of the store’s inventory, even though it was a retail
establishment. He did not know such basic business information
as the store’s gross profit percentage or in what years the store
had earned a profit. He did not advertise to a significant
extent. He did move the situs of his store several times, the
last change of location occurring in the early 1980's; however,
we do not find that any of these moves establishes a profit
intent during the subject years. There is no evidence that
petitioner considered moving his store during any of the years of
consecutive losses following his last move in the early 1980's,
nor that he otherwise altered his operation of the store during
such years in an effort to make it profitable
This factor supports respondent's determination.
2. Expertise of Petitioner
We consider the expertise of petitioner with respect to his
store. Sec. 1.183-2(b)(2), Income Tax Regs. A taxpayer's
expertise, research, and study of an activity, as well as his or
her consultation with experts, may show a profit intent with
respect thereto. Id. In preparing for an activity, a taxpayer
need not make a formal market study, but he or she should
undertake a basic investigation of the factors that would affect
the activity’s profitability. Underwood v. Commissioner,
T.C. Memo. 1989-625; Burger v. Commissioner, T.C. Memo. 1985-523,
affd. 809 F.2d 355 (7th Cir. 1987).
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