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their favor, but it is not conclusive. Cf. Engdahl v.
Commissioner, supra at 668-669.
This factor favors petitioners’ position.
5. Petitioners’ Past Successes in Other Activities
That a taxpayer has engaged in similar activities in the
past and converted them from unprofitable to profitable
enterprises may indicate that the taxpayer is engaged in the
present activity for a profit, even though the activity is
presently unprofitable. See sec. 1.183-2(b)(5), Income Tax Regs.
Petitioners engaged in a dog breeding activity, which
operated at a net loss in 3 of 4 years for which petitioners’ tax
returns reflect the operating results for that activity.
Similarly, petitioners’ antiques activity also reported operating
losses in 5 of the 6 years for which its results are part of the
record. From the annual compensation that Mr. McKeever received
from Aero Industrial Alloy, Inc., we infer that Aero Industrial
Alloy, Inc., was successful.
Petitioners argue that they are entrepreneurial in nature,
and their history of ending unprofitable businesses supports
their contention of profit motivation. We disagree. Mrs.
McKeever testified that the dog activity was closed because the
owner of a quality stud dog moved away. Mrs. McKeever also
testified that she switched to the horse activity because she
thought horses would be more profitable than dogs. The antiques
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