                       T.C. Memo. 1997-367



                     UNITED STATES TAX COURT


             RICHARD JACKSON SLEEPER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9231-96.                 Filed August 11, 1997.



     Richard Jackson Sleeper, pro se.

     Alvin A. Ohm, for respondent.


                       MEMORANDUM OPINION

     GOLDBERG, Special Trial Judge:     This case was heard pursuant

to section 7443A(b)(3) and Rules 180, 181, and 182.1    Respondent

determined deficiencies in petitioner's Federal income taxes in

the amounts of $3,232, $4,089, and $4,001 for the taxable years

1992, 1993, and 1994, respectively.   The issue for decision is

1
     Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                  2

whether petitioner engaged in tournament fishing for profit

during the years in issue.

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated by this reference.       Petitioner resided in Dallas,

Texas, at the time his petition was filed.

     During the years in issue, petitioner was employed full time

by Gourmet Award Foods as a regional sales manager in

Duncanville, Texas.   Petitioner received wage income in the

amounts of $54,489, $47,684, and $47,000 in 1992, 1993, and 1994,

respectively.   Petitioner also received income from the sale of

assets in each of these years in the amounts of $5,013, $9,102,

and $10,233.

     Petitioner became interested in tournament fishing sometime

in 1989 or 1990.   He had friends who were involved in the

activity, and he traveled to lakes with them in order to obtain

knowledge about fishing.    To learn about tournament fishing,

petitioner met other fishermen at these lakes and watched fishing

programs on television.    Petitioner had not engaged in fishing

prior to this time, although he had fished with his father on

occasion when he was younger.    Petitioner began to participate in

tournaments, specifically bass tournaments, in 1990 or 1991.

     The tournaments in which petitioner fished were conducted

within the State of Texas.    Petitioner fished in some circuit
                                 3

tournaments, including Bass and Buddy tournaments and Angler's

Choice tournaments, and some individual tournaments such as the

McDonald's tournaments.    Typically, tournament participants had

to be out on the lake by 6 or 7 in the morning and fished until

3:30 in the afternoon.    Petitioner owned his own boat for

fishing.   Petitioner estimated that he competed in 15 to 20

tournaments in each of the years 1991 and 1992, 10 or 11

tournaments in 1993 and 1994, and about 20 in 1995.

     Generally, an entry fee was required in order to participate

in tournaments.   The fees charged varied among tournaments, and,

within some tournaments, amateurs and professional paid different

fees.

     Petitioner found that the largest constraint on his

participation in tournament fishing was time.    Generally, he was

only able to practice and participate in tournaments on the

weekends because he worked full time.

     Petitioner retained copies of receipts for his expenditures,

as well as the canceled checks related to tournament fishing, in

envelopes by year.   Petitioner also maintained log books.    These

books contained information on each of the tournaments in which

petitioner participated, including such information as what he

caught, what he used to catch it, the weather conditions, the

temperature, the lakes fished, and the days on which he fished.
                                4

     During the years in issue, petitioner earned some gross

income from the tournaments in which he participated.   However,

petitioner has never earned income in excess of his expenses from

tournament fishing, including years subsequent to those at issue.

Petitioner could not predict when the activity might become

profitable.

     At sometime, petitioner acquired a corporate sponsor, Luhr

Jensen, a lure manufacturer.   The sponsor did not pay petitioner

any endorsement fees; however, he was allowed to purchase lures

at a discount.   Petitioner also participated in some seminars on

behalf of Luhr Jensen.   Petitioner's photograph and testimonial

were displayed in an advertisement for a video on how to obtain

corporate sponsorship.   However, it is unclear whether this

occurred during or after the years in issue.   Moreover, it does

not appear that petitioner received compensation for this

endorsement.

     In 1993, petitioner consulted a certified public accountant

with respect to the preparation of his income tax returns.     The

accountant informed petitioner that if he were engaged in

tournament fishing for profit, his related expenses would be

deductible.

     On Schedule C of his Federal income tax return for 1992,

petitioner reported gross receipts in the amount of $2,835 and

deductions in the amount of $13,398 from tournament fishing.
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Petitioner claimed a loss in the amount of $10,563 from this

activity.   On his 1993 return, petitioner reported gross receipts

of $1,350, less deductions in the amount of $14,891, for a loss

of $13,541 from this activity.   For 1994, petitioner claimed a

loss of $14,329 from tournament fishing resulting from gross

receipts in the amount of $2,100, less expenses of $16,429.

     In the notice of deficiency, respondent disallowed

petitioner's claimed losses from tournament fishing for each of

the years in issue because petitioner had not established that he

was involved in the activity for profit, and, thus, the

limitation of section 183 applied.   As a computational result of

these adjustments, respondent disallowed a portion of

petitioner's itemized deductions in the amounts of $1,003,

$1,286, and $642 for 1992, 1993, and 1994, respectively.

     Respondent's determinations are presumed correct, and

petitioner bears the burden of proving them erroneous.     Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).      Section

183 generally limits allowable deductions attributable to an

activity to the extent of gross income from that activity if the

taxpayer engages in such activity without the objective of

profit.   Section 183(c) defines an activity not engaged in for

profit as "any activity other than one with respect to which

deductions are allowable for the taxable year under section 162

or under paragraph (1) or (2) of section 212."   Whether
                                 6

petitioner was engaged in tournament fishing for profit depends

on whether he was so engaged "with an ‘actual and honest’

objective of making a profit."   Elliott v. Commissioner, 90 T.C.

960, 970 (1988), affd. without published opinion 899 F.2d 18 (9th

Cir. 1990); Dreicer v. Commissioner, 78 T.C. 642, 645 (1982),

affd. without opinion 702 F.2d 1205 (D.C. Cir. 1983).     Although a

reasonable expectation of profit is not required, petitioner's

profit objective must have been bona fide.    Hulter v.

Commissioner, 91 T.C. 371, 393 (1988).   Whether petitioner

possessed the necessary objective is a question of fact to be

determined based on all facts and circumstances, and petitioner

bears the burden of proving such objective.    Taube v.

Commissioner, 88 T.C. 464, 480 (1987).

     The regulations set forth the following nonexclusive factors

to consider in determining whether an activity is engaged in for

profit:   (1) The manner in which the taxpayer carries on the

activity; (2) the expertise of the taxpayer or his advisers; (3)

the time and effort expended by the taxpayer in carrying on the

activity; (4) the expectation that assets used in the activity

may appreciate in value; (5) the success of the taxpayer in

carrying on other activities; (6) the taxpayer's history of

income or losses with respect to the activity; (7) the amount of

occasional profit, if any, which is earned; (8) the financial

status of the taxpayer; and (9) whether elements of personal
                                 7

pleasure or recreation are involved.   Sec. 1.183-2(b), Income Tax

Regs.

     The balance of the relevant factors tends to support

respondent's position that petitioner did not engage in

tournament fishing for profit.   Petitioner maintained some

records; however, he has not suggested or shown that he did so in

order to conduct his activity in a more profitable manner.

Although petitioner was gaining expertise in fishing over the

years, when he commenced the activity he was a recreational

fishermen, and he did not consult with any advisers, at any time,

concerning the profitability associated with this type of

activity.   Petitioner never earned a profit from tournament

fishing, nor could he project when he might do so.   Furthermore,

the losses claimed by petitioner in the years in issue produced a

tax benefit by reducing his income tax liability in each year.

Finally, petitioner derived personal pleasure from this activity.

He testified that he chose to compete in bass tournaments, as

opposed to those for other types of fish, because bass are tough

and he enjoys challenges.

     On the other hand, some evidence favors petitioner.

Petitioner devoted a significant amount of his free time to

practicing for, and participating in, tournament fishing.     In

addition, petitioner worked at securing corporate sponsorship.

However, this effort does not appear to have been directed at
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making a profit because such sponsorship was not financially

rewarding.

     Petitioner argues that a taxpayer may be engaged in an

activity for profit even if losses are sustained for a number of

years.   See, e.g., Keanini v. Commissioner, 94 T.C. 41 (1990);

Kimbrough v. Commissioner, T.C. Memo. 1988-185.   However, as

stated above, whether a taxpayer is engaged in an activity for

profit depends upon the specific facts and circumstances of the

individual case.   Based on our analysis of the factors, we

conclude that petitioner did not engage in tournament fishing

with the requisite profit objective.   See Connolly v.

Commissioner, T.C. Memo. 1994-218, affd. without published

opinion 58 F.3d 637 (5th Cir. 1995).   Respondent is sustained on

this issue.

     To reflect the foregoing,


                                          Decision will be entered

                                     for respondent.
