- 38 -
Commissioner, supra at 666-667. For example, keeping books and
records related to an activity may be indicative of a profit
objective. Id.; sec. 1.183-2(b)(1), Income Tax Regs. In
addition to maintaining records, advertising an activity may
indicate a profit objective. Engdahl v. Commissioner, supra.
Also, adapting new techniques and abandoning inefficient methods
may support the conclusion that the taxpayer possessed the
requisite profit objective. Allen v. Commissioner, supra at 35;
sec. 1.183-2(b)(1), Income Tax Regs.
Here, petitioners failed to conduct their farm activity in a
businesslike manner. They did not maintain complete and accurate
books, nor did they keep contemporaneous records of receipts and
expenditures arising from their farm activity. In many instances
they failed to provide respondent with the evidence of payment in
the form of canceled checks, invoices, or receipts for expenses
claimed, or evidence of business purpose. Petitioners' notations
on checks as to the business purpose of such checks were written
after the fact; i.e., at the end of the year in which the
expenses were allegedly incurred. In fact, in many instances,
petitioner was not quite sure what went into some of the expenses
claimed.
Advertising an activity may be indicative of a profit
motive. In 1991, however, the only advertising expense incurred
by petitioners was for a local newspaper ad listing a cockatiel
and a ram for sale. In 1992, petitioners did not advertise
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