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The nonbusinesslike manner in which petitioner carried on
his business would normally weigh against him in the
determination of whether he had a bona fide profit objective.
However, as in the Harrison case, because of the speculative
nature of petitioner’s business, we view the manner in which he
carried on his business as a neutral factor.
2. The Expertise of Petitioner or His Advisers
Preparation for the activity by extensive study of its
accepted business, economic, and scientific practices or
consultation with people who are expert in these practices may
indicate a profit objective where the taxpayer carries on the
activity in accordance with such practices. Sec. 1.183-2(b)(2),
Income Tax Regs.
Before he started his gold mining activity, petitioner had
more than 20 years of work experience in the mining and quarrying
industry. Although petitioner had never mined specifically for
gold, he had considerable knowledge of the mining process in
general. In the early 1990s, petitioner began reading
prospecting books and became interested in gold mining.
Petitioner researched the history of abandoned gold mines in
California, analyzing their production rates at the time they
were abandoned. Petitioner sought advice from local dealers of
gold mining equipment. He also built his own lightweight
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