J. Michael and Susan Reimer - Page 24




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               (5) The Success of The Taxpayer in Carrying on Other                   
          Similar or Dissimilar Activities.                                           
               The fact that a taxpayer has engaged in similar activities             
          in the past and converted them from unprofitable to profitable              
          enterprises may indicate that he is engaged in the present                  
          activity for profit, even though the activity is presently                  
          unprofitable.  Sec. 1.183-2(b)(5), Income Tax Regs.                         
               Mr. Reimer is a well-educated and smart businessman.  Upon             
          entering the automobile sales industry, he advanced quickly from            
          a salesperson to a financial manager.  He also used his skills to           
          participate in the administration of various horse breeding                 
          shows, including writing scripts for the shows.  However, despite           
          his ability to make contacts with others in the horse breeding              
          industry, petitioners have consistently failed to make this                 
          activity profitable.  Mr. Reimer’s efforts in the water and air             
          filtration activity also failed to be profitable.                           
               Even with Mr. Reimer’s business experience and ability, we             
          do not find that he applied such experience to their horse                  
          breeding activity to make it profitable.                                    
               This factor favors respondent’s position.                              
               (6) The Taxpayer’s History of Income or Losses With Respect            
          to The Activity.                                                            
               A history of income, losses, and occasional profits from an            
          activity may indicate a profit objective.  Allen v. Commissioner,           







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