Barry S. and Yvonne C. Hillman - Page 22

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          Past Success in Similar or Dissimilar Activities                             
               A taxpayer’s past success in similar or dissimilar                      
          activities is relevant in determining profit motive.  See sec.               
          1.183-2(b)(5), Income Tax Regs.  Dr. Hillman concedes that a                 
          previous effort at horse breeding was unsuccessful.  Dr. Hillman             
          did operate his medical practice successfully.  While success in             
          a dissimilar activity might weigh in petitioners’ favor, given               
          the substantial time that Dr. Hillman devoted to his medical                 
          practice, it is not clear that he spent significant time on the              
          show horse activity.  Accordingly, this factor is neutral.  Cf.              
          Surridge v. Commissioner, T.C. Memo. 1998-304.                               
          The Activity’s History of Income and Losses                                  
               An activity’s history of income or loss may reflect whether             
          the taxpayer has a profit motive.  See sec. 1.183-2(b)(6), Income            
          Tax Regs.  Unless explained by customary business risks or                   
          unforeseen or fortuitous circumstances beyond the taxpayer’s                 
          control, a record of continuous losses beyond the period                     
          customarily required to obtain profitability may indicate that               
          the activity is not engaged in for profit.  See id.   A record of            
          substantial losses over many years and the improbability of                  
          achieving a profitable operation are important factors bearing on            
          a determination of profit motive.  See Golanty v. Commissioner,              
          supra at 426; Bessenyey v. Commissioner, 45 T.C. at 274.                     

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