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Camelot Inn through 1997 exceeded the residence’s appreciation in
value at that time. The goal must be to realize a profit in the
entire operation. Bessenyey v. Commissioner, 45 T.C. 261, 274
(1965), affd. 379 F.2d 252 (2d Cir. 1967). Petitioner testified
that he purchased the residence from his ex-wife because “First
of all, the land that this house is built on has been in my
family since about 1840. Second of all, I constructed the home
myself literally with hammer and nails.” Petitioner did not
purchase the Sullivan Hollow residence for speculative
appreciation. Consequently, we conclude this factor weighs
against finding a profit objective.
We consider the taxpayer’s success in carrying on other
similar or dissimilar activities. We have recognized that a
taxpayer’s success in other business activities may indicate a
profit objective. Hoyle v. Commissioner, T.C. Memo. 1994-592;
sec. 1.183-2(b)(5), Income Tax Regs. Petitioner purportedly
conducted several other business activities prior to, and during,
the time he operated the bed and breakfast activity. During the
years 1994 through 1997, petitioner, who had no cattle, allegedly
was engaged in a beef cattle activity. With respect to that
activity, petitioner reported losses of $3,198, $4,040, $1,384,
and $1,065, respectively, for those years on his Schedules F. In
1994, petitioner reported an $8,167 loss with respect to an
asbestos and radon abatement activity. Petitioner reported a
profit of $1,838 with respect to the asbestos and radon abatement
activity in 1995. In 1997, petitioner reported an $824 loss with
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Last modified: May 25, 2011