15
Petitioners were employed full time by the medical
corporation, and accordingly spent only weekends and some
evenings at the ranch. Petitioner may have not allowed polo to
interfere with his surgery schedule, and there was also an
obvious recreational element to time spent at the ranch.
The fact that taxpayers devote a limited amount of time to
an activity may not indicate a lack of profit objective where the
taxpayers utilize the services of qualified persons to conduct
the activity. Cornfeld v. Commissioner, 797 F.2d at 1052; De
Mendoza v. Commissioner, supra; sec. 1.183-2(b)(3), Income Tax
Regs. Petitioners hired Mr. White, who acted as a full-time
ranch supervisor. His duties were broad, but it was clear to us
that he managed the day-to-day activities of the ranch. This
factor favors petitioner.
4. Expectation of Appreciation in Value
An expectation that the appreciation of assets used in an
activity will produce an overall profit when netted against the
losses from that activity may indicate a profit objective. Sec.
1.183-2(b)(4), Income Tax Regs. There is no outright requirement
that any appreciation offset the aggregate losses, but there must
be a bona fide expectation that appreciation will produce a
profit at some time in the future. See Allen v. Commissioner, 72
T.C. 28, 36 (1979); Engdahl v. Commissioner, 72 T.C. 659, 668
(1979). Additionally, section 1.183-1(d)(1), Income Tax Regs.,
provides that the possible increase in the value of land used in
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