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4. Expectation That Assets May Appreciate
An expectation that assets used in the activity will
appreciate in value may indicate a profit objective. See sec.
1.183-2(b)(4), Income Tax Regs.
Petitioner contends that the guns he purchased will
appreciate in value. This was based on petitioner’s own
estimation, and he offered no evidence to support his contention
that the value of the guns is sufficient to recoup the
accumulated losses. In any event, it would seem that collecting
guns is a different activity from writing about them.
5. Past Success in Similar or Dissimilar Activities
A taxpayer’s past success in similar or dissimilar
activities is relevant in determining a profit objective. See
sec. 1.183-2(b)(5), Income Tax Regs.
Petitioner contends that he was successful as a writer for
Rocketdyne and that he considers himself a professional writer
because of his employment with Rocketdyne. When employed by
Rocketdyne, petitioner wrote technical or scientific proposals
for the company. Presumably, petitioner was a skilled and
talented technical writer. This is quite different from writing
articles and novels for the public. Furthermore, petitioner did
not have to market the writing that he performed for Rocketdyne.
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Last modified: May 25, 2011