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flexible enough to permit him to devote time to his racing as
needed. Petitioner’s wife and son also assisted petitioner in
doing the required work.
4. The Expectation That the Assets Used in the Activity
May Appreciate in Value
We next examine the expectation that the assets used in
petitioner’s drag racing activity may appreciate in value. A
taxpayer may intend, despite the lack of profit from current
operations, that an overall profit will result when appreciation
in the value of assets used in the activity is realized.
Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965), affd. 379
F.2d 252 (2d Cir. 1967); sec. 1.183-2(b)(4), Income Tax Regs.
Although petitioner believed he had a quality car and used
quality parts in his car, he did not expect the assets he used in
the drag racing activity to appreciate in value. Petitioner
concentrated on maintaining his car in as good a condition as
possible to minimize repair and upgrade costs, not because he
thought that doing so would cause the value of the car to
increase.
5. The Success of the Taxpayer in Carrying On Other
Similar or Dissimilar Activities
We next examine petitioner’s success in carrying on other
similar or dissimilar activities. If a taxpayer has previously
engaged in similar activities and made them profitable, this
success may show that the taxpayer has a profit objective, even
though the current activity is presently unprofitable. Sec.
1.183-2(b)(5), Income Tax Regs. A taxpayer’s success in other,
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