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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
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