- 35 -
the 8 years prior to trial, petitioner earned revenue on sales of
decorative rock in increasing amounts. Petitioner testified that
he continued to generate revenue from sales of decorative rock in
2000 and that his gross revenue during the first 2 months of 2000
was approximately $55,000, an increase of 200 percent compared to
revenue earned in the first 2 months of 1999. Referencing the
“Resource Management Plan” map prepared by and for the BLM that
acknowledged the “high mineral potential” on and around
petitioner’s mining claims, petitioner testified that
there is “absolutely” gold and silver on his claims and that he
intends to “go back to the gold when the price turns”.
The possibility of a speculative profit becomes less
speculative when a taxpayer shows he actually realized a profit
in years subsequent to those at issue. See Hillman v.
Commissioner, T.C. Memo. 1999-255; Hoyle v. Commissioner, T.C.
Memo. 1994-592; Smith v. Commissioner, T.C. Memo. 1993-140
(actual profits or losses in subsequent years have probative,
although not determinative, significance). Here, petitioner’s
efforts to generate revenue from the production and sale of
decorative rock are succeeding, as revenue has increased steadily
each year, and in 1999 petitioner’s mining activities generated a
profit before depreciation. This factor favors petitioner’s
position.
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011