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$70,428.52 loss petitioner reported in 1995. Given petitioner's
record of losses, we see no possibility that petitioner could
recoup his expenditures. Therefore, we find this factor weighs
against petitioner.
7. Amount of Occasional Profits Earned, If Any
The amount and frequency of occasional profits earned from
the activity may also be indicative of a profit objective. See
sec. 1.183-2(b)(7), Income Tax Regs. Other than occasional small
cash awards, about which petitioner was vague and of which he
kept no records, petitioner's automobile drag racing activity
produced no income.
However, the "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 even
though losses or only occasional small profits are actually
generated." Id. There is no doubt that the automobile drag
racing activity was a "highly speculative venture". However,
petitioner has not convinced us that he ever had an "opportunity
to earn a substantial ultimate profit" from the activity.
The small cash awards petitioner received were minuscule in
relation to both the losses he incurred and his total investment
in the activity, and without a sponsor, petitioner never had an
opportunity to earn a substantial ultimate profit. Accordingly,
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