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vii. Amounts of Occasional Profits
Occasional profits may indicate a profit motive. The
absence of profits, however, is not determinative of a lack of
profit motive. Petitioners need only have an actual and honest
profit objective. Absent actual profits generated from the
activity, an opportunity to earn a substantial ultimate profit in
a highly speculative venture may be sufficient to indicate that
the activity is engaged in for profit. Sec. 1.183-2(b)(7),
Income Tax Regs. “Profit” means economic profit independent of
tax consequences. Antonides v. Commissioner, 91 T.C. 686,
693-694 (1988), affd. 893 F.2d 656 (4th Cir. 1990); Dreicer v.
Commissioner, 78 T.C. at 644-645.
The fishing activity has never earned a profit, and
petitioners have not persuaded us that PMSI had a chance either
to make a profit or to recoup their losses. Whereas petitioners
testified that the nonoccurrence of three misfortunes would have
resulted in PMSI’s reporting a profit for each subject year, we
are unpersuaded that such would have been the case. Among other
things, we are unpersuaded that petitioners would have won the
claimed amounts of money had the misfortunes not occurred. The
record lacks any objective evidence to establish the specific
prizes which petitioners would have won had those misfortunes not
occurred, or the net amount of those prizes which would have
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