Robert and Joyce Dirkse - Page 17

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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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