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construction company. His employer was not in the gold mining
business. Petitioner began searching for gold using a pan,
shovel, and pick in 1982. In 1989, using his knowledge of
dredging gained from his employment, he began mining for gold in
rivers and streams in the foothills of mountains. Petitioner
maintained his regular job, expecting that the mining activity
would supplement his income. He mined sometimes at night but
mostly on weekends because of the demands of his regular job. He
was able to perform additional mining during layoff periods.
Petitioner read mining literature and attended a few
meetings with others interested in gold mining but otherwise had
no formal training in the activity. He admired the work of
author Dave McCracken, who has made a profit in gold dredging.
According to petitioner, the McCracken operation enlists others
to dredge for the gold that McCracken ultimately keeps. Other
than a window-washing business in 1978 or 1979, petitioner was
not engaged in other trade or business activities.
Petitioner’s gold mining activity involved time, effort,
money, and risk. After identifying a site for prospecting,
petitioner would haul heavy dredging equipment to the site. He
was a certified scuba diver. To search for gold, he would dive
to depths of 25 to 30 feet and operate the dredging equipment for
up to 8 to 10 hours. Mud, gravel, and other material from the
river were brought up and screened through what was referred to
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