- 15 -
mining activity or working at home on the equipment used in the
activity. Although no calendar for 1996 was introduced, the
Court infers a similar amount of activity for 1996 given the
record as a whole. Moreover, the activity was conducted
regularly throughout the years at issue, and occasionally
petitioner took time off from his regular job to attend to his
dredging equipment. The Court is satisfied that petitioner’s
activity was not primarily recreational. On this record,
petitioner’s expenditures of time and effort imply a profit
objective. This factor weighs in petitioner’s favor.
The term “profit” encompasses appreciation in the value of
assets, such as land, used in an activity. Sec. 1.183-2(b)(4),
Income Tax Regs. The equipment petitioner used in his gold
mining activity could only depreciate. In the absence of any
property with substantial appreciation potential, the Court does
not consider this factor significant.
The fact that a taxpayer has engaged in similar activities
in the past and converted them from unprofitable to profitable
enterprises may indicate that he is engaged in the present
activity for profit, even though the activity is presently
unprofitable. Sec. 1.183-2(b)(5), Income Tax Regs. The record
reflects only one other entrepreneurial activity by petitioner:
a window cleaning business he operated in 1978 or 1979.
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011