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losses for that reason, we believe he had no basis for a bona
fide profit expectation because he had no sources of income from
the farm. This factor favors respondent.
7. Amount of Occasional Profits, If Any
The amount of any occasional profits the taxpayer earned
from the activity may show that the taxpayer had a profit
objective. Sec. 1.183-2(b)(7), Income Tax Regs. Petitioner
received no revenues from the farm from 1992 to 1998.
Petitioners concede that this factor favors respondent.
8. Financial Status of the Taxpayer
The receipt of a substantial amount of income from sources
other than the activity, especially if the losses from the
activity generate large tax benefits, may indicate that the
taxpayer does not intend to conduct the activity for profit.
Sec. 1.183-2(b)(8), Income Tax Regs. Petitioners had nonfarm
income of $69,704 in 1995, $69,258 in 1996, and $71,050 in 1997,
and they claimed Schedule F losses of $8,818, $7,468, and $9,012,
respectively. Petitioner testified credibly that he could not
afford to lose money from the farm. Petitioners did not have a
substantial amount of income against which to deduct their
losses, and they did not enter the farming activity to produce
losses to offset their income. See Callahan v. Commissioner,
T.C. Memo. 1996-65, affd. 111 F.3d 892 (5th Cir. 1997); Roberts
v. Commissioner, T.C. Memo. 1987-182 (taxpayers, who were not
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