Danny K. Eldridge and Elma J. Eldridge - Page 5

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          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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