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about 1985. Petitioners moved into the house in approximately
1987, and have resided there through the time of trial. In 1986,
petitioners sold a mobile home park for $7 million.
In applying the factors to determine profit objective, we
first consider the manner in which the taxpayer carries on the
activity. “The fact that the taxpayer carries on the activity in
a businesslike manner and maintains complete and accurate books
and records may indicate that the activity is engaged in for
profit.” Sec. 1.183-2(b)(1), Income Tax Regs. Petitioners did
not maintain books and records. Rather, petitioner made a
monthly list of expense categories and, based on his canceled
checks, recorded the amounts expended for each category. At
trial, petitioner submitted various invoices, canceled checks,
and the monthly lists for the taxable years in issue. Petitioner
did not have a business plan to make money from the ranch.
Petitioner did not keep the type of records which could be used
to increase the profitability of a business. Petitioner never
prepared budgets or market projections which would outline
strategies for ensuring a profitable business venture and making
informed business decisions on a periodic basis. Such lack of
information upon which to make educated business decisions tends
to belie a taxpayer’s contentions that an activity was pursued
with the primary objective of making a profit. Dodge v.
Commissioner, T.C. Memo. 1998-89, affd. without published opinion
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