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A taxpayer's involvement in similar activities in the past,
especially where he has converted them from unprofitable to
profitable operations, may indicate a profit objective, despite a
currently unprofitable activity. Sec. 1.183-2(b)(5), Income Tax
Regs. There is no evidence that petitioner has ever operated a
ranch before, nor that he has had any profit from any ranching,
farming, or guest cottage activities. This factor favors
respondent.
6. Petitioner's History of Income or Losses
Neither startup losses nor losses that result from
unforeseen circumstances necessarily show that the taxpayer
lacked a profit objective. Engdahl v. Commissioner, supra at
669; sec. 1.183-2(b)(6), Income Tax Regs. However, losses
incurred over many years with little likelihood of future profits
indicate a lack of profit objective. Golanty v. Commissioner, 72
T.C. at 426.
Since its inception and through 1992, petitioners have
consistently reported significant expenses and negligible gross
income, thus producing losses from the ranching activity. The
expenses claimed for the years the parties considered (1986-92)
total $768,804, while the total income over the same period was
only $52,345. Petitioner argues that considerable expenditures
were incurred getting the ranch in working order, buying and
training the horses, and that the return for these expenditures
would not be seen until several years later. We are not
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