- 7 -
1994, $54,413 in 1995, and $11,481 in 1996. Petitioner also
experienced net losses from the gold mining activity in the years
subsequent to the years at issue.
Respondent determined that petitioner’s gold mining activity
was not an activity engaged in for profit under section 183(a).
On this and all other issues, petitioner bears the burden of
proof.6
Section 183(a) provides that, if an activity engaged in by
an individual is not engaged in for profit, no deduction
attributable to such activity shall be allowed, except as
provided in section 183(b).
To deduct expenses of an activity under either section 162
or 212 (and thus avoid the limitations of section 183), a
taxpayer must show that he or she engaged in or carried on the
activity with the objective of making a profit. See sec. 1.183-
2(a), Income Tax Regs. In the U.S. Court of Appeals for the
Ninth Circuit,7 a taxpayer must show that the activity was
6 Sec. 7491 provides that, under certain circumstances,
the burden of proof is on the Secretary with respect to a
taxpayer’s liability for taxes, penalties, and additions to tax
in court proceedings arising in connection with examinations
commencing after July 22, 1998. The parties stipulated that the
examination of petitioner’s returns commenced prior to July 22,
1998.
7 But for the provisions of sec. 7463(b), the decision in
this case would be appealable to the U.S. Court of Appeals for
the Ninth Circuit. See sec. 7482(b)(1)(A). This Court generally
applies the law in a manner consistent with the holdings of the
(continued...)
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