- 12 - 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 lightweightPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011