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7. Occasional Profits
The amount of any occasional profits, if large in relation
to losses incurred or the taxpayer's investment, may indicate a
profit objective. Sec. 1.183-2(b)(7), Income Tax Regs. The
possibility of a substantial profit in a highly speculative
venture may indicate a profit objective even where profits are
occasional and small or nonexistent. Id.
As petitioners have shown no profit during any year of the
Maple Row cattle activity, this factor is neutral.
8. Taxpayer’s Financial Status
Substantial income from sources other than the activity
(particularly if the losses from the activity generate
substantial tax benefits) may indicate that the activity is not
engaged in for profit, especially if there are personal or
recreational elements involved. Sec. 1.183-2(b)(8), Income Tax
Regs.
During each of the years in issue, Dr. Burrus earned
substantial income from his medical practice, which obviously
made it possible for petitioners to bear the losses incurred in
connection with the cattle activity. However, recreational
elements, which “especially” suggest the absence of a profit
15(...continued)
years.
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