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Petitioner argues that he had an actual and honest objective
to realize a profit from his mining activity during the years at
issue, so his deductions with respect to his mining activity
should not be limited by section 183. Respondent contends that
an analysis of the relevant objective factors reveals that
petitioner lacked a bona fide objective to make a profit.
Applying the Factors
1. The Manner in Which Petitioner Conducted the Activity
The fact that a taxpayer carries on the activity in a
businesslike manner and maintains complete and accurate books and
records may indicate that the activity is engaged in for profit.
Sec. 1.183-2(b)(1), Income Tax Regs. Generally, if the activity
in question is carried on in a manner substantially similar to
other activities of the same nature that are profitable, a profit
motive may be indicated. See Sullivan v. Commissioner, T.C.
Memo. 1998-367, affd. without published opinion 202 F.3d 264 (5th
Cir. 1999); sec. 1.183-2(b)(1), Income Tax Regs. Gold mining and
other similar speculative activities are different from most
other business activities because they generally produce no
significant income until a find is made, and then the income is
earned in one lump sum. In Harrison v. Commissioner, T.C. Memo.
1996-509, we found that a taxpayer’s contemporaneous handwritten
lists of expenses were sufficient records for his gold mining and
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