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5. Petitioners' Success in Similar or Dissimilar Activities
We consider petitioners' success in similar or dissimilar
activities. Sec. 1.183-2(b)(5), Income Tax Regs. Although an
activity is unprofitable, we take into account whether the
taxpayer previously converted similar activities from
unprofitable to profitable enterprises. Id.
Ms. Surridge was a successful insurance agent operating her
own business. Whereas an individual's success in a dissimilar
activity would ordinarily tilt this factor toward him or her,
such is not the case here because Ms. Surridge spent little time
in petitioner's horse activity.
This factor does not favor either party; it is neutral.
6. Activity's History of Income and Losses
We consider petitioners' history of income and/or losses
with respect to their horse activity. Sec. 1.183-2(b)(6), Income
Tax Regs. Losses continuing beyond the period customarily
required to make an activity profitable, if not explainable, may
indicate that the activity is not engaged in for profit.
Although a series of losses at the beginning of an activity does
not necessarily mean that the activity was not entered into for
profit, a continuing string of losses may weigh against a profit
intent absent unforeseen or fortuitous circumstances beyond the
taxpayer's control (e.g., fire, disease, theft). Id.
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