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Petitioner has not established that he expected his store's
assets to increase in value. Indeed, the value of the store's
inventory decreased over time.
This factor supports respondent's determination.
5. Taxpayer's Success on Similar or Dissimilar Activities
We consider petitioner's success on similar or dissimilar
activities. Sec. 1.183-2(b)(5), Income Tax Regs. Although an
activity is unprofitable, we may take into account whether the
taxpayer previously converted similar activities from
unprofitable to profitable enterprises. Id.
Petitioner was an electrician and a real estate agent. He
has not established that he experienced any success in a similar
or dissimilar activity.
This factor supports respondent's determination.
6. An Activity's History of Income and/or Losses
We consider petitioner's history of income and/or losses
with respect to his store. Sec. 1.183-2(b)(6), Income Tax Regs.
Losses continuing beyond the period customarily required to make
an activity profitable, if not explainable, may indicate that the
activity is not engaged in for profit. Although a series of
losses at the beginning of an activity does not necessarily mean
that the activity was not entered into for profit, such a string
of losses weighs against a profit intent absent unforeseen or
fortuitous circumstances beyond the taxpayer's control (e.g.,
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