James Tinnell - Page 27




                                       - 27 -                                         
          moved his equipment to Colorado and began another mining                    
          operation, which he also quickly terminated when he discovered he           
          had been misled.                                                            
               In 1996, following the loss of the Quartette Mine project,             
          petitioner began to investigate the sale of decorative rock as an           
          income source and opened a rock yard in Las Vegas.  Petitioner              
          took out an advertisement in the telephone directory yellow pages           
          with respect to his decorative rock business.  Petitioner’s                 
          revenue from the sale of decorative rock in the 3 years prior to            
          trial was significant, growing steadily from year to year; i.e.,            
          $32,364 in 1997, $126,170 in 1998, and $373,566 in 1999.                    
               Petitioner continually searched for operating methods and              
          business ventures to reduce his losses, generate revenue, and               
          improve profitability.  Ultimately, petitioner was successful in            
          generating substantial revenue from the sale of decorative rock.            
          Thus, we are convinced that the changes petitioner implemented              
          before, during, and after the years at issue have the potential             
          to affect the long-range profitability of petitioner’s mining               
          activity materially and favorably.  See Golanty v. Commissioner,            
          72 T.C. at 428 (changes must be sufficient to change materially             
          the prospect of profitability).                                             
                         d.  Summary                                                  
               Petitioner’s changes in operating methods, adoption of new             
          techniques, and abandonment of unprofitable methods to improve              






Page:  Previous  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  Next

Last modified: May 25, 2011