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3. Time and Effort Expended in Activity
Time and effort expended in carrying on an activity may be
indicative of profit motive, particularly in the absence of
substantial personal or recreational elements associated with the
activity. Sec. 1.183-2(b)(3), Income Tax Regs. During 1992,
Tony devoted 100 to 300 hours to his stock car activity. We
believe that this time expended is less indicative of a profit
motive than of Tony’s love of stock car racing.
A taxpayer’s withdrawal from another occupation to devote
most of his energies to the activity may evidence a profit
motive. Id. Tony testified that he reported to work at CRC
every day while conducting his stock car activity.
This factor favors respondent.
4. Expectation That Assets May Appreciate in Value
On reply brief, petitioners concede that they did not expect
Tony’s stock car to appreciate in value.
5. Taxpayer’s Success in Other Activities
If the taxpayer has engaged in similar activities in the
past and converted them from unprofitable to profitable
enterprises, this circumstance may indicate that the activity in
question was entered into for profit, even though it is presently
unprofitable. Sec. 1.183-2(b)(5), Income Tax Regs. Although
Tony had been involved with automobile racing since 1968, the
evidence does not indicate that his previous involvement was for
profit or profitable. Although Tony and Robert once owned a
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