- 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