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significant amount of time in pursuit of the activities. This
factor favors petitioners.
Expectation That Assets May Appreciate in Value
Despite a lack of profit from current operations, a profit
objective may be indicated where a taxpayer intends to earn an
overall profit with income earned from operations together with
the appreciation in the value of assets used in the activity.
Sec. 1.183-2(b)(4), Income Tax Regs. This factor is not
applicable to this case.
Taxpayer’s Success in Other Activities
A profit objective may be indicated where the taxpayer has
in the past undertaken activities and made them profitable
despite initial unprofitability. Sec. 1.183-2(b)(5), Income Tax
Regs. Because there is no indication that petitioner was engaged
in prior similar activities, or that he made other activities
profitable, this factor also is not applicable to this case.
History of Income/Losses and Amount of Occasional Profits, If Any
A profit objective is strongly indicated where the taxpayer
has experienced a series of profitable years. Sec. 1.183-
2(b)(6), Income Tax Regs. A series of losses incurred during the
startup stage of an activity does not necessarily indicate the
lack of a profit objective, but it may so indicate if the losses
continue beyond the customary startup period and are not
otherwise explainable as due to customary business risks. Id.
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