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the assets used in connection with their farm activity,
including their land and farm equipment, had appreciated
in value. The only evidence in the record of appreciation
is Mr. Jackson's uncorroborated testimony that farmland
located near petitioners' land was sold in 1990 for
"$94,000 for I think it was 10 acres", and that farm
equipment sometimes appreciates in value. We find
Mr. Jackson's testimony to be vague and too general to
be helpful. Moreover, the record contains no objective
evidence of the value of petitioners' land or farm
equipment at the end of the years in issue or at any other
point, and there is nothing in the record to show that
appreciation of petitioners' land and farm equipment would
bring about an "overall profit" from petitioners' activity.
See sec. 1.183-2(b)(4), Income Tax Regs.
(5) Success in Other Similar or Dissimilar Activities
Section 1.183-2(b)(5), Income Tax Regs., provides
as follows:
The fact that the taxpayer has engaged in similar
activities in the past and converted them from
unprofitable to profitable enterprises may
indicate that he is engaged in the present
activity for profit, even though the activity
is presently unprofitable.
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