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supra. For instance, a series of startup losses or losses
sustained because of unforeseen circumstances beyond the taxpayer’s
control may not indicate a lack of profit motive. See sec. 1.183-
2(b)(6), Income Tax Regs.
No profits have ever been generated from petitioners’ Schedule
C activities, and none are expected in the near future.
Petitioners have been conducting their Schedule C activities well
beyond the length of time that can be reasonably called the
“startup” period, and there is no evidence in the record indicating
that their Schedule C losses are the result of unforeseen
circumstances. Rather, the extended period of losses is
attributable to petitioners’ unchecked expenditures and their
failure to develop a suitable market for their produce. Indeed,
the growing disparity between petitioners’ losses and revenue
stream is indicative of an unprofitable undertaking and is
inconsistent with petitioners’ purported intent to provide
supplemental income. Consequently, this factor weighs against a
finding of a profit motive.
6. The Amount of Occasional Profits, Earned, If Any
If an activity generates only small, infrequent profits and
typically generates large losses, the taxpayer conducting the
activity may not have a profit objective. See Golanty v.
Commissioner, supra at 427; sec. 1.183-2(b)(7), Income Tax Regs.
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