- 10 - his profitability. To begin with, petitioner stated that his location “was one mile off Route 417 on a side road called Sullivan Hollow, which pretty much meant that I wasn’t going to get drive by business.” Petitioner testified that he “cut back quite a bit on advertising” and reduced the price charged for the rooms. Petitioner’s ads were attractive but did not display his building, apparently because his bed and breakfast building would not compare favorably with other bed and breakfast buildings which were pictured in the other ads he offered into evidence. We note that none of the changes made by petitioner, in essence to reduce losses and control costs, had any material effect. Petitioner continued to incur sizeable losses. Thus, we find petitioner did not carry on the activity in a businesslike manner. We conclude that this factor is not indicative of the requisite profit objective. We consider the expertise of the taxpayer. A taxpayer’s expertise, research, and study of an activity, as well as his consultation with experts, may be indicative of a profit objective. Sec. 1.183-2(b)(2), Income Tax Regs. Prior to operating the Camelot Inn, petitioner served as a chef in the United States Army. Ms. Hughes worked during college as a housekeeper and receptionist at a motel. Petitioner belonged to the Cattaraugus County Tourism Bureau and the National Bed and Breakfast Association. However, petitioner testified that he had no prior experience operating a bed and breakfast. Prior to starting the bed and breakfast, petitioner did not consultPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
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