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respect to a woodworking activity. We conclude that the largely
unsuccessful results from petitioner’s other purported activities
do not indicate a profit objective.
We consider the taxpayer’s history of income or losses with
respect to the activity. A history of losses over an extended
period of time may indicate the absence of a profit objective.
Allen v. Commissioner, 72 T.C. 28, 35 (1979); sec. 1.183-2(b)(6),
Income Tax Regs. The magnitude of the activity’s losses in
comparison with its revenues is an indication that the taxpayer
did not have a profit objective. Dodge v. Commissioner, T.C.
Memo. 1998-89, affd. without published opinion 188 F.3d 507 (6th
Cir. 1999). In this case, petitioner’s losses in comparison with
his revenues are substantial. No profits have ever been
generated from petitioner’s bed and breakfast activity, and none
are expected in the near future. This factor weighs against
finding a profit objective.
We consider the amount of occasional profits, if any, which
are earned. If an activity generates only small, infrequent
profits and typically generates large losses, the taxpayer
conducting the activity may not have a profit objective. Sec.
1.183-2(b)(7), Income Tax Regs. In this context, profit means
economic profit, independent of tax savings. Seaman v.
Commissioner, 84 T.C. 564, 588 (1985). As we have set forth
above, petitioner has a history of substantial losses. There is
no indication from the record that petitioner can realistically
expect profitability in the near future. This factor weighs
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