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Petitioner presented no evidence to show either that he
changed his methods over the years in issue to improve
profitability or that he took steps to reduce costs in order to
make a profit. In fact, we note that petitioner testified that
he needed to increase the team’s exposure through participating
in a number of large tournaments taking place in other States.
Participating in these tournaments required expensive travel and
lodging costs, and petitioner did not present any evidence to
show that he attempted to either reduce these expenses or
increase the fees required for players in order to improve the
school’s profitability. Even though petitioner testified that he
knew that he would have to offer “scholarships” to certain
players in order to increase the chances of having stellar talent
on the RBS team, he did not provide any evidence showing that he
considered raising fees for other players that could afford the
costs. Based on the above, we conclude that this factor weighs
in favor of respondent.
Expertise of Petitioner
Preparation for an activity by extensive study of its
accepted business, economic, and scientific practices, or
consultation with those who are expert therein, may indicate a
profit objective. Engdahl v. Commissioner, supra at 668; sec.
1.183-2(b)(2), Income Tax Regs. Efforts to gain experience and a
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