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profit from its appreciation rather than for purposes of
conducting the cattle activity. It follows that the land was
“held primarily with the intent to profit from increase in its
value” during the years in issue, within the meaning of the
regulations. Sec. 1.183-1(d)(1), Income Tax Regs.7
Since petitioners held the Maple Row land primarily with the
intent to profit from its appreciation, the holding of the land
and the farming activities are considered a single activity under
the regulations only if the farming activity reduces the cost of
holding the land. Id. The regulations further provide:
the farming and holding of the land will be considered
a single activity only if the income derived from
farming exceeds the deductions attributable to the
farming activity which are not directly attributable to
7 While there is evidence in the record that the Cheatham
Property was originally acquired by FBHR primarily for a cattle
activity (because of its proximity to Drs. Foreman’s and Burrus’s
medical practices), the regulations provide for separate activity
treatment of landholding and farming whenever the land “is
purchased or held” primarily for its appreciation. Sec. 1.183-
1(d)(1), Income Tax Regs. (Emphasis added.) We are persuaded by
his testimony and actions that by 1990 and the remaining years in
issue, Dr. Burrus was holding the Cheatham Property primarily for
its appreciation. With respect to the Robertson and Sumner
Properties, the record contains no evidence of Dr. Burrus’s
intentions at the time of the acquisition of those properties,
although farming activities on the properties were reported on
certain of petitioners’ returns before the years in issue.
However, Dr. Burrus’s testimony concerning his intentions during
the years in issue was directed at all three properties utilized
in the Maple Row operations, and persuades us that the Robertson
and Sumner Properties were likewise held primarily for their
appreciation potential during the years in issue.
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