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resort activity's income and expenses. He printed brochures to
advertise the resort, and he offered rooms for rent. He expended
energy and minimized costs by doing all of the repair work
himself. He hired Alvarado to provide legal services and to
assist in the maintenance of the resort when petitioner was not
present at the property. Petitioner was experienced in operating
sailboats, so he bought sailboats to attract guests to the
resort. Moreover, it was not unreasonable to expect that the
value of Playa de los Vivos would increase, given the property's
location and the promise of future infrastructure development.
While the losses may have been greater than what they would
have been if petitioner had not tried to convert the resort
activity to solar power, that does not mean he was not trying to
operate it for profit. Petitioner credibly testified that he had
a profit motive when he bought Playa de los Vivos and that he
continues to have one today. Generally, a taxpayer's
unimpeached, competent, and relevant testimony "may not be
arbitrarily discredited and disregarded" by the Court. Loesch &
Green Const. Co. v. Commissioner, 211 F.2d 210, 212 (6th Cir.
1954). Respondent did not refute petitioner's testimony, and we
believe petitioner.
Based on all the facts and circumstances, we conclude that
petitioner had a profit motive in operating his resort activity.
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