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Petitioner started that business, as he put it, “just to put food
in my gut” and kept a log book of accounts and appointments.
Petitioner’s window cleaning business experience is not
particularly useful in deciding whether the gold mining activity
was engaged in for profit. The two activities were fundamentally
different. No evidence was offered on the window cleaning
business. At most, his experience in the other business should
have instilled in petitioner the need for complete and accurate
books and records, which petitioner did not carry over to his
gold mining activity. This factor favors respondent.
A series of losses during the initial or startup stage of an
activity may not necessarily be an indication that the activity
is not engaged in for profit. However, where losses continue
beyond a period that would customarily be necessary to bring the
operation to profitable status, such continued losses, if not
explainable as customary business risks or reverses, may be
indicative that the activity is not engaged in for profit. A
series of years in which net income was realized would indicate
that the activity is engaged in for profit. Sec. 1.183-2(b)(6),
Income Tax Regs.
The profit/loss history of petitioner’s gold mining activity
for the years at issue is summarized as follows:
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