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at a full-time job requiring 40 hours per week at Bethlehem,
while claiming that she contributed 30 hours per week year after
year in petitioners' horse activity.
Expectation That Assets May Appreciate
The appreciation of assets, including land used in the
activity, is to be considered in determining whether a taxpayer
intended to derive a profit from his activity. Sec. 1.183-
2(b)(4), Income Tax Regs. An expectation that assets used in the
activity may appreciate may be an indication of profit objective.
Engdahl v. Commissioner, 72 T.C. 659, 669 (1979).
Petitioners resided on a 1-acre parcel of land during the
years in issue. Petitioners maintained their horses on a
separate but adjacent 2-acre parcel of land, which was owned by
Mr. Taras' parents. Because petitioners do not own the land upon
which they kept their horses during the years at issue, we do not
consider the land an asset that may be used in determining
whether petitioners had a profit objective.
Petitioners’ horses were the only assets used in the
activity that might have appreciated. Petitioners argue that the
quality of their horses improved over time and that on the basis
of this improvement, petitioners expected to recoup their prior
losses. Mr. Taras testified that each of three horses bred from
the stallion Norquestor and owned by petitioners has a value of
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