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Thus, the taxpayer may intend to derive a profit from
the operation of the activity, and may also intend
that, even if no profit from current operations is
derived, an overall profit will result when
appreciation in the value of land used in the activity
is realized since income from the activity together
with the appreciation of land will exceed expenses of
operation. * * * [Id.]
Petitioner presented insufficient evidence to enable us to
evaluate this factor adequately. Consequently, we do not
consider this factor in our analysis.
5. Petitioner’s Success in Other Entrepreneurial
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.
The record demonstrates that petitioner had at least two
successful entrepreneurial ventures before commencing his mining
activities. First, in or about 1973, petitioner and his father
purchased Delta Roofing Mills, a roofing manufacturing business
in Slidell, Louisiana, for approximately $1 million. Within 5
years, petitioner and his father tripled the company’s gross
sales and sold it to Republic Gypsum Corp. for approximately $3
million.
Second, during the late 1970’s, petitioner invented the
cream. In September 1980, petitioner and his partner formed Zila
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