- 10 -
weighs toward a profit objective. This factor favors neither
party. We consider it neutral.
4. Expectation that the assets will appreciate in value
We consider the expectation that assets used in petitioners’
activity may appreciate in value. See sec. 1.183-2(b)(4), Income
Tax Regs. The term "profit" includes the appreciation in the
value of assets used in an activity. Id.
Petitioners have not established that they expected their
activity’s assets to increase in value. Indeed, the value of
petitioners’ cattle decreased after the years in issue.
This factor supports respondent's determination.
5. Taxpayer's success on similar or dissimilar activities
We consider petitioners’ success on similar or dissimilar
activities. See sec. 1.183-2(b)(5), Income Tax Regs. Although
an activity is unprofitable, the fact that a taxpayer previously
converted similar activities from unprofitable to profitable
enterprises may show a profit intent with respect thereto. Id.
Petitioners have not established that they 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 petitioners’ history of income and/or losses
with respect to their activity. See sec. 1.183-2(b)(6),
Income Tax Regs. Losses continuing beyond the period customarily
required to make an activity profitable, if not explainable,
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011