- 16 -
D. The Expectation That Assets May Appreciate in Value
An expectation that assets may appreciate in value may also
be an indication of the taxpayer’s motive with respect to such
activity. See sec. 1.183-2(b)(4), Income Tax Regs. Petitioners
contend that the appreciation in the value of their four
properties more than offsets petitioners’ historical losses. Mr.
Jorgenson testified that the appreciation on the four properties
exceeded the historical losses and that the Colorado ranch could
be sold for more than the amount of the historical losses. Mr.
Jorgenson, however, failed to explain to the Court how he knows
his claims to be true. We note with regard to the Colorado
ranch, for example, petitioners purchased land in 1983 for $458
an acre ($550,000 � 1,200 acres), while in 1992, they purchased
adjoining land for $158 an acre ($101,000 � 640 acres). Because
no appraisals of the four properties were presented to the Court,
we do not accept petitioners’ uncorroborated claims.
Accordingly, this factor does not support petitioners’
assertions.
E. The Success of the Taxpayer in Carrying on Other
Similar or Dissimilar Activities
A profit motive may be indicated by the “fact that a
taxpayer has engaged in similar activities in the past and
converted them from unprofitable to profitable enterprises”.
Sec. 1.183-2(b)(5), Income Tax Regs. Petitioners argue that they
profitably operated cattle operations on their parents’ ranches
and that they have successfully operated their medical practices.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011