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hours a week is a considerable amount of time to spend on an
activity, especially for an individual such as petitioner who
works professionally 36 hours a week and who performs most of the
tasks of the horse activity which may be viewed as mundane and
not recreational; e.g., feeding, washing, and worming the horses.
Such time and apparently mundane tasks, however, are just as much
a part of a horse breeding and showing hobby as they are of a
horse breeding and showing business.
This factor favors respondent.
4. Expectation That Assets Will Appreciate in Value
A taxpayer’s expectation that assets such as land and other
tangible property used in an activity may appreciate in value to
create an overall profit may indicate that the taxpayer has a
profit objective as to that activity. Sec. 1.183-2(b)(4), Income
Tax Regs. An overall profit is present if net earnings and
appreciation are enough to recoup losses sustained in prior
years. Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965), affd.
379 F.2d 252 (2d Cir. 1967).
Petitioner argues that this factor profoundly supports her
position. According to petitioner, the appreciation in the value
of the horses, land, and other property used in the horse
23(...continued)
27 of the 30 hours that she devoted to the horse activity. This
leaves only a total of 3 hours to be attributed to the other 4
days of the week.
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