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taxpayer who maintains good records may be genuinely interested
in using the records to develop a profitable business.
Respondent argues that petitioner did not maintain adequate books
and records for his artist activity. We agree.
The only business record petitioner placed in evidence was a
cash receipts journal. The internal revenue agent who audited
petitioner for 1988 through 1991, James M. Johnson, testified at
trial that he disallowed the expenses related to the artist
activity because petitioner's records consisted of a shoe box
full of credit card statements and various receipts that did not
reconcile with petitioner's cash disbursements journal. We find
that petitioner did not maintain adequate books and records.
Furthermore, petitioner has offered no evidence to show that
he conducted his artist activity in a businesslike manner. He
did not use the limited records that he did keep on the activity
to monitor expenses or to assess the activity's profitability.
He did not maintain a budget for the activity or make any sort of
financial projections. Nor did he even maintain a separate
checking account for the activity.
Similarly, a taxpayer's failure to implement any operating
changes after continued losses may indicate the lack of intent to
make a profit. Brodrick v. Derby, 236 F.2d 35, 38 (10th Cir.
1956); Lewis v. Commissioner, T.C. Memo. 1992-420; Stubblefield
v. Commissioner, T.C. Memo. 1988-480. There is no evidence in
the record that petitioner has ever earned a profit from his
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