- 11 -
tournaments was essentially attributable to bad luck, but not to
her skills as a bowler, which had improved. We find her
explanation of the reason for her losses to be reasonable, and we
conclude that this factor neither supports nor undercuts the
claim that she entered into the bowling activity with a profit
objective. See id.
e. Amount of Occasional Profits, If Any
An opportunity to earn a substantial profit in a highly
speculative venture is ordinarily sufficient to indicate that the
activity is engaged in for profit even though losses or only
occasional small profits are actually generated. Sec. 1.183-
2(b)(7), Income Tax Regs.
Mrs. Whitehurst earned prize winnings of $1,528 in 1995,
$3,030 in 1996, $3,052 in 1997, $2,725 in 1998, and $889 in 1999,
but, as discussed above, her expenses exceeded her winnings.
Although she did not win one of the top prizes of $10,000,
$20,000, or $40,000, we are satisfied that she had an objective
to win, and we find her testimony to be credible. Her stated
objective is supported by the fact that she would have earned
significant prize winnings had she won one or more tournaments
that offered a large prize. See Bolt v. Commissioner, 50 T.C.
1007 (1968); Canale v. Commissioner, T.C. Memo. 1989-619; sec.
1.183-2(a), Income Tax Regs. The fact that these tournaments
were for amateur bowlers is not relevant because the prize
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011