Robert and Joyce Dirkse - Page 14

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          conclusion that the taxpayer possessed the requisite profit motive.         
          See Allen v. Commissioner 72 T.C. 28, 35 (1979).                            
               Here, the record reveals numerous instances where petitioners          
          did not conduct their Schedule C activities in a businesslike               
          manner.  Petitioners failed to acquire the necessary local business         
          licenses to sell their produce, resulting in lost revenue.                  
          Petitioners did not maintain any formal business plans, budgets,            
          ledgers, or other accounting records.  In addition, they did not            
          possess any mileage logs or formal records of payments made to              
          their undocumented workers. (In this regard, petitioners were               
          unable to substantiate some of their claimed deductions.4)                  
          Petitioners also failed to keep separate bank accounts; they                
          intermingled their personal funds with those of their Schedule C            
          activities and paid all expenses from this account.  (Petitioner            
          testified that he decided against using a separate business account         
          because the bank charged a per check fee.)                                  
               Despite incurring losses over a number of years, there is no           
          convincing evidence in the record indicating that petitioners               
          undertook meaningful action to control or rectify the continual             
          stream of losses arising from their Schedule C activities.                  
          Petitioners’ losses increased during the 3 years between 1994 and           

               4    For instance, petitioners claimed 89,159 miles on their           
          1995 return as the distance traveled in connection with their               
          Schedule C activities; at trial, they conceded that the actual              
          number of miles was approximately 15,600.                                   

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