Jack F. and Virginia Surridge - Page 10

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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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