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2(b)(3), Income Tax Regs.; Lundquist v. Commissioner, supra; De
Mendoza v. Commissioner, supra. Petitioners both worked full
time for the Department of Veterans Affairs. Dr. Velez also ran
a surgery practice. Petitioners testified that Dr. Velez spent 6
to 8 hours per week, and Dr. Remler spent only 1 to 2 hours per
week. In addition, the activity has a substantial personal
aspect--petitioners devoted this time to GJR, their son. We find
that petitioners did not devote a significant amount of time to
the special education activity. These facts weigh in favor of
respondent.
4. Expectation That Assets Used in Activity May Appreciate
in Value
The expectation that assets used in the activity will
appreciate in value sufficiently to lead to an overall profit
when netted against losses may indicate a profit motive. Sec.
1.183-2(b)(4), Income Tax Regs.; Engdahl v. Commissioner, supra
at 668-669; De Mendoza v. Commissioner, supra. Petitioners had
no assets devoted to the special education activity. This fact
is neutral.
5. Success of Petitioners in Carrying on Other Similar
or Dissimilar Activities
The fact that the taxpayer has engaged in similar activities
in the past and converted them to profitable enterprises may
indicate that he engaged in the present activity for profit.
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