- 35 -
account, Dr. Burrus’s actions involving the partnership--reducing
his exposure to the operational losses while holding onto his
full interest in the land--appear financially astute. On
balance, given the generally positive track record of Dr.
Burrus’s various entrepreneurial undertakings, we believe that
the application of section 1.183-2(b)(5), Income Tax Regs.,
provides support for the existence of an intent to profit.
6. Activity’s History of Income or Losses
An activity's history of income or loss may reflect whether
the taxpayer has a profit objective. Sec. 1.183-2(b)(6), Income
Tax Regs. Unless explained by unforeseen or fortuitous
circumstances beyond the taxpayer's control, a record of
continuous losses beyond the period customarily required to
obtain profitability may indicate that the activity is not
engaged in for profit. Golanty v. Commissioner, supra at 426;
Bessenyey v. Commissioner, supra at 274; Hillman v. Commissioner,
supra; sec. 1.183-2(b)(6), Income Tax Regs.
As earlier calculated for purposes of determining whether
petitioners’ farming activity should be treated as a separate
activity from the holding of land, the results from petitioners’
Maple Row cattle activity for the years in issue are as follows:
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 NextLast modified: May 25, 2011