James Tinnell - Page 25




                                       - 25 -                                         
               Petitioner has failed to demonstrate that he maintained                
          accurate and businesslike books and records with respect to his             
          mining activities during the years at issue.                                
                         b. Similarity to Other Activities of the                     
                              Same Nature                                             
               Neither petitioner nor respondent offered any evidence as to           
          the manner in which profitable mining businesses are conducted.             
          See Wesinger v. Commissioner, T.C. Memo. 1999-372; Filios v.                
          Commissioner, T.C. Memo. 1999-92, affd. 224 F.3d 16 (1st Cir.               
          2000); sec. 1.183-2(c), Example (4), Income Tax Regs.  Thus, we             
          are not in a position to evaluate whether petitioner’s mining               
          activity was conducted in a manner substantially similar to that            
          of other profitable mining activities.                                      
                         c.  Changes Made To Foster Profitability                     
               There are numerous examples in the record demonstrating that           
          petitioner made changes in operating methods, adopted new                   
          techniques, and/or abandoned unprofitable methods in the course             
          of conducting his mining activities.  See Engdahl v.                        
          Commissioner, supra at 666-667; sec. 1.183-2(b)(1), Income Tax              
          Regs.                                                                       
               Petitioner continually increased the capacity of his mill              
          site and mine (also known as the Roman mine) and periodically               
          developed or improved the methods he used in his mining activity.           
          For example, petitioner originally employed a leaching process of           
          cyanidation for the recovery of precious metals.  Petitioner was            





Page:  Previous  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  Next

Last modified: May 25, 2011