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recreational elements associated with the activity. See Daley v.
Commissioner, T.C. Memo. 1996-259; sec. 1.183-2(b)(3), Income Tax
Regs. A taxpayer’s withdrawal from another occupation to devote
most of his energies to the activity may be evidence that the
activity was engaged in for profit. See sec. 1.183-2(b)(3),
Income Tax Regs.
Respondent does not dispute that petitioner devoted a
substantial amount of time and effort to his mining activities.
In or about 1988, petitioner began to disengage from his
pharmaceutical and medical activities and to spend more time in
his mining activity. Petitioner estimated he spent about 90
percent of his time on mining and only 10 percent of his time
working in his medical practice during the years at issue.
Petitioner’s estimate is corroborated by the small amount of
revenue petitioner derived from his medical practice in the 10
years prior to trial. Further, the record demonstrates that
petitioner spent an enormous amount of his time, personal
finances, and energy over the past 20 years on his mining
activities.
This factor favors petitioner’s position.
4. The Expectation That Assets Used in the Activity
Would Appreciate in Value
The term “profit” encompasses revenue from operations and
appreciation in the value of assets, such as land. Sec. 1.183-
2(b)(4), Income Tax Regs.
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