Opinion
Editorial Note:
This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA9 Rule 36-3 regarding use of unpublished opinions)
Argued and Submitted June 10, 1998.
82 A.F.T.R.2d 98-5375, 98-2 USTC P 50,584
Appeal from the United States Tax Court.
Before WALLACE, T.G. NELSON, and KLEINFELD, Circuit Judges.
MEMORANDUM
Mark and Indra Massingill appeal pro se from the United States Tax Court's decision upholding the Commissioner of Internal Revenue's determination of federal income tax deficiencies in tax year 1990. The tax court concluded that Mark Massingill (Massingill) did not have a profit motive in his metal mining and refining activity in 1990, and therefore disallowed claimed business loss deductions for depreciation and operating expenses. We have jurisdiction pursuant to 26 U.S.C. § 7482, and we affirm.
Massingill contends that the tax court clearly erred by finding that he did not have a profit motive in 1990. We review for clear error the tax court's factual determination that a taxpayer's activity was not engaged in for profit. See Carter v. Commissioner, 645 F.2d 784, 786 (9th Cir.1981).
A taxpayer may not fully deduct losses from an activity unless the activity is engaged in for profit. See 26 U.S.C. § 183. When considering whether an activity is engaged in for profit, all facts and circumstances with respect to the activity are to be considered, and no one factor is determinative. See Carter, 645 F.2d at 786 n. 3; 26 C.F.R. § 1.183-2(b) (stating that nine relevant factors should be considered to determine whether activity is engaged in for profit).
Massingill's metal mining and refining activity exhibited a history of losses that began seven years before tax year 1990. Although Massingill's activity profited in its first year, the aggregate profit for the next five years was only $358.00. Thereafter, the activity reported continuous losses. In addition, Massingill did not carry on his activities in a businesslike manner because he did not keep adequate records, made minimal marketing efforts, and had no written business plan. The tax court found as a matter of fact that "[i]n 1990, petitioner spent approximately 6 months addressing issues raised by DHS." Its opinion, however, did not give him credit for this six months as "time and effort spent by the taxpayer in carrying out the activity," under the nine factor test in section 1.183-2(b) of the regulations. He was credited with only one month spent on his business. We wonder why the tax court treated the six months as a "personal pursuit of relief" from the California Department of Health Services Toxic Substances Control Program enforcement procedures. It was undisputed that the California environmental enforcement proceedings, which absorbed six months of Mr. Massingill's time in 1990, derived entirely from his earlier attempts to extract and sell mercury for profit. Nevertheless, the nine factor test would have yielded the same result even if the time spent on the business were treated as seven months rather than one month.
At best, Massingill established that the metal mining and refining activity might have initially had a profit motive. Massingill, however, failed to show that the dominant motivation behind continuing his activity in 1990 was to realize a profit. See Independent Elec. Supply, Inc. v. Commissioner, 781 F.2d 724, 726 (9th Cir.1986). Thus, the tax court did not clearly err by finding that Massingill did not engage in his metal mining and refining activity during 1990 with the objective of making a profit. See Carter, 645 F.2d at 786; 26 C.F.R. § 1.183-2(b).
AFFIRMED.
Note: This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.