- 6 - While people may not normally associate trading in used cars as a recreation, we do recognize that some people do get a certain pleasure from repairing cars. But, what concerns us more is the history of losses. While a person may start out with a bona fide expectation of profit, even if it is unreasonable, there is a time when, in light of the recurring losses, the bona fides of that expectation must cease. See Filios v. Commissioner, 224 F.3d 16 (1st Cir. 2000), affg. T.C. Memo. 1999-92. This is particularly pertinent here where petitioner could not estimate when the activity might become profitable. Moreover, there is nothing in the record to reasonably suggest that the activity, as petitioner operated it during the years in issue, had been, or would ever be, profitable. We are also concerned that there is no evidence that petitioner, despite losses of more than $79,000 from 1993 to 1996, ever sought expert advice concerning the profitability of the venture. In the same vein there is no evidence that petitioner altered his method of doing business to cut the stream of losses. The bottom line is that, whatever this activity was, it was not operated for profit. There is one aspect of respondent’s determinations with regard to Mayo’s Auto Sales that we think was erroneous.Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011