-27-
4. The Expectation That the Assets Used in the Activity
May Appreciate in Value
We next examine the expectation that the assets used in the
jet charter 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.
Neither petitioner testified that he or she expected the
Falcon to appreciate in value, and, in fact, petitioners
ultimately sold the Falcon for less than the price at which they
had purchased it. Although Mr. Rabinowitz did suggest that the
negative publicity regarding the safety of the Falcon depressed
the value of the aircraft, petitioners did not indicate that they
expected the Falcon to appreciate in value, nor that they
considered the possibility that the jet might appreciate in value
when they decided to begin the jet charter activity. This factor
therefore does not support petitioners’ contention that they
operated the jet charter activity for profit.
5. The Success of the Taxpayer in Carrying On Other
Similar or Dissimilar Activities
We next examine the success of petitioners 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
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