- 5 -
the case and the applicable legal precedents. Sher v.
Commissioner, 89 T.C. 79, 84 (1987), affd. 861 F.2d 131 (5th Cir.
1988). The Commissioner's position can be justified even if
ultimately rejected by the court. Wilfong v. United States, 991
F.2d 359, 364 (7th Cir. 1993). The fact that respondent did not
prevail in the underlying litigation does not require a
determination that the position of the Internal Revenue Service
was unreasonable, Broad Ave. Laundry & Tailoring v. United
States, 693 F.2d 1387, 1391-1392 (Fed. Cir. 1982); however, it
remains a factor to be considered. Heasley v. Commissioner, 967
F.2d 116, 120 (5th Cir. 1992), affg. in part, revg. in part, and
remanding T.C. Memo. 1991-189; Estate of Perry v. Commissioner,
931 F.2d 1044, 1046 (5th Cir. 1991).
Respondent's position in Eldridge v. Commissioner, T.C.
Memo. 1995-384, was that petitioners did not engage in their
cattle-raising activities for profit under section 183. In the
analysis of a case under section 183, the determination of
whether the requisite profit objective exists depends upon all
the surrounding facts and circumstances of the case. Keanini v.
Commissioner, 94 T.C. 41, 46 (1990); Engdahl v. Commissioner, 72
T.C. 659, 666 (1979); sec. 1.183-2(b), Income Tax Regs. Section
1.183-2(b), Income Tax Regs., provides a nonexclusive list of
factors to be considered in determining whether an activity is
engaged in for profit. These factors include: (1) The manner in
which the taxpayers carried on the activity; (2) the expertise of
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