- 21 -
and the activity's lack of profitability.10 We therefore reject
petitioners' argument that the aforementioned circumstances
should militate against any negative inference derived from the
activity's pattern of losses. In the record, we have information
concerning the activity for a period of 7 years, and in each of
those years petitioners incurred a substantial loss. Given that
petitioners never reported a profit on their sponsorship
activity, and that the activity generated only $1,113 in income
during the years in issue, we find that this factor supports
respondent's determinations. Cf. Kimbrough v. Commissioner, T.C.
Memo. 1988-185 (taxpayer's income from his golfing activity
increased steadily over the years involved in his case).
7. Amounts of Occasional Profits
Occasional profits may indicate a profit motive. However,
the absence of profits is not determinative of a lack of profit
motive. Petitioners need only have an actual and honest profit
objective. Absent actual profits generated from the activity, an
opportunity to earn a substantial ultimate profit in a highly
speculative venture is ordinarily sufficient to indicate that the
activity is engaged in for profit. Sec. 1.183-2(b)(7), Income
Tax Regs. "Profit" means economic profit independent of tax
10 We find it noteworthy that Constant's employment as a
golf instructor apparently continued uninterrupted during this
period.
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