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employment of qualified persons to conduct the activity for him.
See id. There is no evidence regarding how much time petitioner
spent pursuing his recording activity during the year in issue.
Petitioner’s effort with regard to his recording activity in
prior years consisted of occasionally sending taped submissions
to record companies in the hopes of attaining a recording
contract. There is no evidence of regular or continuous steps to
promote his recording endeavors prior to or during the year in
issue. Petitioner did not devote the time and effort
commensurate with the profit-seeking pursuit of developing a
recording business. See McMillan v. Commissioner, T.C. Memo.
1989-441.
Although a taxpayer receives no income from operating his
enterprise, he may intend to derive a profit from the potential
appreciation of his business assets. See sec. 1.183-2(b)(4),
Income Tax Regs. There is no evidence that petitioner’s
recording equipment would potentially appreciate, and we infer
that such equipment would instead experience wear and tear over
time and thus depreciate in value.
A taxpayer’s success in carrying on similar activities and a
history of income with respect to his current activity may be
evidence of a profit-seeking motivation in engaging in the
activity. See sec. 1.183-2(b)(5) through (7), Income Tax Regs.
Although petitioner had engaged in his recording activity since
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