Raymond J. and Ilene H. Pavelko - Page 11

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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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