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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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