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vi. An Activity’s History of Income and/or Losses
A series of losses beyond the startup stage may be
indicative of the absence of a profit motive unless the losses
can be blamed on unforeseen or fortuitous circumstances beyond
the taxpayer’s control. Sec. 1.183-2(b)(6), Income Tax Regs.
Petitioners argue that this factor weighs in their favor.
We disagree. Notwithstanding that their tournament winnings
totaled almost $500,000 in 1994 through 1997, PMSI reported
losses from the fishing activity of $168,042 for 1994, $270,755
for 1995, $307,016 for 1996, and $249,181 for 1997. In total,
PMSI incurred almost $1.5 million of expenses to win
approximately $500,000, producing an approximate loss of $1
million. The record, moreover, contains no credible evidence to
suggest that PMSI ever expected to recoup any of these losses.
The fact that the fishing activity suffered losses year after
year and that petitioners took no meaningful action to reverse
the tide supports a finding that they were indifferent as to
whether the losing trend could be reversed. Ranciato v.
Commissioner, 52 F.3d 23, 25-26 (2d Cir. 1995), vacating T.C.
Memo. 1993-536. Although it is true that petitioners aspired in
the tournaments to win large cash prizes, the mere fact that they
so aspired and were qualified to win those prizes does not mean
that PMSI entered into the fishing activity with the requisite
profit objective. This factor favors respondent.
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