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4. Expectation That Assets May Appreciate
An expectation that assets used in the activity will
appreciate may indicate a profit objective. See sec. 1.183-
2(b)(4), Income Tax Regs. Accordingly, a profit motive may be
inferred even where there are no operating profits, so long as the
appreciation in value of the activity’s assets exceeds its
operating expenses of the current year and its accumulated losses
from prior years. See Golanty v. Commissioner, 72 T.C. 411, 427-
428 (1979), affd. 647 F.2d 170 (9th Cir. 1981).
Petitioners purchased the Corona property in 1983 in order to
relocate their apiary activity, not for speculative appreciation.
Although petitioner testified regarding the appreciation of land in
the vicinity of the Corona property, there is no credible evidence
in the record as to the value of petitioners’ property or that any
appreciation in the assets used in petitioners’ Schedule C
activities will exceed the cumulative losses of their Schedule C
activities. Consequently, this factor weighs against finding a
profit motive.
5. History of Income or Losses From the Activity
A history of losses over an extended period of time may
indicate the absence of a profit objective. See Allen v.
Commissioner, 72 T.C. at 34. Although a long history of losses is
an important criterion, it is not necessarily determinative. See
Engdahl v. Commissioner, 72 T.C. at 669; Allen v. Commissioner,
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