- 23 - (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,Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Next
Last modified: May 25, 2011