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Section 1.183-2(b), Income Tax Regs., sets forth a
nonexhaustive list of factors that courts often consider in
deciding whether a profit objective exists. No single factor and
not even a majority of the factors is controlling. Id. Rather,
the factors are evaluated in order to arrive at an informed
conclusion based on all the evidence regarding whether the
requisite profit objective existed. Golanty v. Commissioner,
supra.
We considered the factors set forth in section 1.183-2(b),
Income Tax Regs., and concluded that some factors favored
respondent and some factors favored petitioner. One of the
factors that favored respondent was petitioner’s history of
income or loss. Petitioner had engaged in his mining activity
since at least 1980 and had claimed substantial net operating
losses with respect to his mining activity in every year from
1989 through and including the years at issue. A record of
substantial losses over many years is an important factor bearing
on a taxpayer’s true intent. Golanty v. Commissioner, supra at
426. We also found that petitioner failed to prove that he
maintained accurate and businesslike records, a fact that is
relevant in determining whether the manner in which petitioner
conducted his activity is consistent with an intent to make a
profit.
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Last modified: May 25, 2011