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Petitioner's testimony indicates that his preparation for
the apple orchard activity was casual, intermittent, and short-
term, rather than extensive. Petitioner did not mention how
attending the shows, exhibits, course on pruning trees, or
conversations with his neighbor in any way aided petitioners in
making the apple orchard activity profitable. Furthermore, there
is no evidence in the record that petitioners conducted a
thorough investigation into the profitability of their apple
orchard activity. They did not present evidence that they had a
business plan, or that they had made projections of revenue,
expenses, or profits that they expected would be generated by the
apple orchard activity. It is unlikely that one would incur such
substantial expenses with respect to an activity, which he or she
intends to be profitable, without first making a complete
investigation of how to do so. Pederson v. Commissioner, T.C.
Memo. 1994-555. Accordingly, we find this factor weighs against
petitioners.
Third, the time and effort expended by the taxpayer in
carrying on the activity is an indication of whether a profit
motive existed. Sec. 1.183-2(b)(3), Income Tax Regs.
Petitioners did expend time on their apple orchard activity as
Mrs. Zdun testified that she spent 4 hours each day during the
apple season, and petitioner testified that he spent between 500
and 600 hours per year. Although the time that petitioners spent
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