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the taxpayer's mere statement of his or her intent. Dreicer v.
Commissioner, 78 T.C. at 645; sec. 1.183-2(a), Income Tax Regs.
After considering all the facts and circumstances in this
case, it is our view that petitioners' operation of Red Caboose
was an activity not engaged in for profit during the years in
issue. Some of the more significant factors we have weighed are
the manner in which petitioners carried on Red Caboose, Red
Caboose's loss history, the time and effort expended by them in
carrying on Red Caboose, their financial status, and their
interest in model railroads as a recreational activity.
That a taxpayer operates an activity in a businesslike
manner and maintains complete and accurate books and records may
indicate that the activity is engaged in for profit. Sec. 1.183-
2(b)(1), Income Tax Regs. Respondent contends that petitioners
did not maintain adequate books and records for their model
railroad activity. We agree.
Petitioners commingled their records for Red Caboose with
their personal records. For 1990 and 1991, they recorded Red
Caboose's sales in their personal appointment book. During 1990,
1991, and 1992, they commingled the receipts for Red Caboose's
expenses with their personal receipts. They could not have
presented a complete set of records for Red Caboose, separate
from their personal records, at any time during the years in
issue. Furthermore, they conducted some of Red Caboose's banking
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