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losses would stop, nor of how the store would alter its methods
of operation in order someday to reap a profit.
Thus, even if we were to assume that petitioner had a profit
objective before the subject years, we would still not be
persuaded that he retained this objective during the subject
years. In order to escape the grasp of section 183, it is not
enough to have a profit intent before the years in dispute. The
taxpayer must possess the required intent during the year in
issue. Sec. 1.183-2(b), Income Tax Regs.; see also Dennis v.
Commissioner, T.C. Memo. 1984-4; Daugherty v. Commissioner,
T.C. Memo. 1983-188.
This factor supports respondent's determination.
7. Amount of Occasional Profits
We consider the occasional amount of profits, if any, from
the subject activity. Sec. 1.183-2(b)(7), Income Tax Regs. For
the reasons stated immediately above, we hold that this factor
favors respondent’s determination.
8. Financial Status of Taxpayer
We consider petitioners' financial status. Sec.
1.183-2(b)(8), Income Tax Regs. Substantial income from sources
other than an activity, particularly if the activity's losses
generated substantial tax benefits, may indicate that the
activity is not engaged in for profit. This is especially true
where there are personal or recreational elements involved. Id.
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