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7. Amount of Occasional Profits, If Any
Petitioner has never generated any profit from his Reliv
activity. Petitioner contends that he will begin to realize
substantial profits only upon sponsoring other Reliv
distributors. Over some 10 years, however, he has sponsored only
his brother and (fleetingly) his son, with minimal effect on
profitability. This factor favors respondent.
8. Taxpayer’s Financial Status
Substantial income from sources other than the activity may
indicate lack of a profit objective, particularly if: (1) Losses
from the activity generate substantial tax benefits, and (2)
personal or recreational elements are involved. Sec. 1.183-
2(b)(8), Income Tax Regs.
For the year at issue and all prior years, petitioner earned
substantial income from his full-time employment as an engineer
at Abbott. For 2002, petitioner sought to offset a portion of
this wage income with a claimed net loss from his Reliv activity.
The claimed net loss is attributable in significant part to
claimed travel expenses which, if allowed, would effectively
permit petitioner to deduct a portion of his otherwise
nondeductible commuting expenses by the expedient of placing drop
cards along his commuting route. His persistence in placing
these drop cards without ever receiving a single response to them
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