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for appreciation or for farming. If appreciation was the
dominant motive, the activities cannot be considered together
because income from ranching did not exceed deductions. For the
1992 through 1995 years at issue, the ranch generated $0 in gross
income. As deductions directly attributable to ranch operations
exceeded this figure in all 4 years, ranching did not reduce the
net cost of carrying the land.
Likewise, even if farming was the primary objective, a
claimed expectation of appreciation cannot help petitioners.
Because no appraisal or value of the ranch was offered as
evidence, it is impossible to determine the extent to which
losses may have been offset by such appreciation. Furthermore,
even if we were to accept petitioner’s uncorroborated estimate of
a 30 to 40 percent area-wide increase in value, the resulting
amount would be insufficient to establish a legitimate
expectation to profit from the property. Since the losses
through 1997 total $155,702, they exceed the original purchase
price of $145,000 for parcel 2. Petitioner would have needed to
expect more than a 100 percent appreciation to recoup his losses.
5. The success of the taxpayer in carrying on other similar or
dissimilar activities.
As stated in section 1.183-2(b)(5), Income Tax Regs.: “The
fact that the taxpayer has engaged in similar activities in the
past and converted them from unprofitable to profitable
enterprises may indicate that he is engaged in the present
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