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of his vacation time to operating Blue Ribbon. Therefore,
despite Mr. Abbene's outside employment with Pride Chemicals, we
conclude that the time and effort expended by Mr. Abbene is a
factor that favors petitioners.
4. Expectation That Assets Used in the Activity May
Appreciate in Value
An expectation that assets used in the activity may
appreciate in value may be an indication of a profit objective.
Engdahl v. Commissioner, 72 T.C. 659, 668 (1979); sec. 1.183-
2(b)(4), Income Tax Regs.
Respondent argues that petitioners had no expectation of
asset appreciation. Petitioners contend that they sincerely and
reasonably believed that the property and the horses used in Blue
Ribbon's operations would appreciate in value.
Petitioners contend that the property had nearly doubled in
value since its acquisition in 1975. Although petitioners point
to the value of the property, we do not consider it to be
relevant to the issue of Mr. Abbene's profit objective with
respect to his horse-related activities. While the term "profit"
may contemplate appreciation in the value of assets, including
land, used in the activity, sec. 1.183-2(b)(4), Income Tax Regs.,
the holding of land for appreciation will generally be considered
a separate activity for purposes of ascertaining a profit motive
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