- 22 -
Schedule F activity, and he performed manual labor on the
Arkansas ranch. He attended a number of competitions and
testified: “I have competed in all the major events, have been
successful, and have been one of the top non-pros in the United
States.” While we acknowledge petitioner’s substantial
contribution of time to the Schedule F activity during the years
in issue, we believe that petitioner’s success as a
nonprofessional was a source of pride to him, which, although not
inconsistent with an intent to make a profit, serves to explain,
in part, the time and money he poured into a then losing
proposition.
7. Expectation of Appreciation
“The term ‘profit’ encompasses appreciation in the value of
assets, such as land, used in the activity.” Sec. 1.183-2(b)(4),
Income Tax Regs. That provision of the regulations also
provides:
Thus, the taxpayer may intend to derive a profit from
the operation of the activity, and may also intend
that, even if no profit from current operations is
derived, an overall profit will result when
appreciation in the value of land used in the activity
is realized since income from the activity together
with the appreciation of land will exceed expenses of
operation. * * * [Id.]
Section 1.183-1(d)(1), Income Tax Regs., however, provides:
If the taxpayer engages in two or more separate
activities, deductions and income from each separate
activity are not aggregated either in determining
whether a particular activity is engaged in for profit
or in applying section 183. * * * the farming and
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011