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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
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