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See Cannon v. Commissioner, 949 F.2d 345, 350 (10th Cir. 1991),
affg. T.C. Memo. 1990-148.
Petitioners presented no evidence concerning many of the
factors contained in the regulations. While petitioner claims
that he maintained books and records, he did not produce any
records at trial. He could not explain the $16,310 deduction
claimed for supplies in 1995, and he could not explain the
components of the $22,494 deduction for other expenses in 1996.
While people may not normally associate trading in used cars as a
recreation, we do recognize that some people do get a certain
pleasure from repairing cars.
But, what concerns us more is the history of losses. While
a person may start out with a bona fide expectation of profit,
even if it is unreasonable, there is a time when, in light of the
recurring losses, the bona fides of that expectation must cease.
See Filios v. Commissioner, 224 F.3d 16 (1st Cir. 2000), affg.
T.C. Memo. 1999-92. This is particularly pertinent here where
petitioner could not estimate when the activity might become
profitable. Moreover, there is nothing in the record to
reasonably suggest that the activity, as petitioner operated it
during the years in issue, had been, or would ever be,
profitable.
We are also concerned that there is no evidence that
petitioner, despite losses of more than $79,000 from 1993 to
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