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activity: “[A]n opportunity to earn a substantial ultimate
profit in a highly speculative venture is ordinarily sufficient
to indicate that the activity is engaged in for profit even
though losses or only occasional small profits are actually
generated.” Respondent’s argument on brief with respect to this
factor consisted solely of the following sentence: “The
petitioner has never reflected a profit from his mining activity,
and his losses have been substantial.”
A mining venture is speculative and may take years to
realize a profit. A mining venture nevertheless may present an
opportunity to earn substantial profits, particularly if the
mining claims involved have “high mineral potential” as at least
some of petitioner’s claims apparently did. Petitioner presented
the testimony of an expert geologist who confirmed that
petitioner’s efforts with respect to the Quartette Mine were
worth pursuing and that some of petitioner’s claims merited
development. While speculative, petitioner’s mining activity
offered the potential to generate significant income, and that
possibility may be sufficient to indicate that petitioner engaged
in the activity for profit even though only losses were produced.
See sec. 1.183-2(b)(7), Income Tax Regs.
Petitioner believed he could and would earn a profit from
his many activities. The objective facts also support
petitioner’s contention that a profit was attainable. In 6 of
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