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During the years at issue, petitioners resided at the family
farm. They derived personal and recreational benefits from the
situs of the farming activity. Petitioner devoted regular and
substantial time and effort to the farming activity, although he
continued to work an average of more than 50 hours per week as a
lawyer and accountant. Petitioner did not explain how the work
he performed on the family farm related to making it profitable.
This factor favors respondent.
4. The Expectation That the Assets Used in the Activity
May Appreciate in Value
We next examine the expectation that the assets used in
conducting the activity may appreciate in value. A taxpayer may
intend, despite the lack of profits 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. Petitioner
intends to give the family farm to his sons, not sell it. Thus,
petitioner is not relying on the appreciation of the family
farm’s assets to offset the losses sustained from his farming
activity. This factor favors respondent.
5. Success in Similar or Dissimilar Activities
We next examine the success of petitioner in carrying on
other similar or dissimilar activities. If a taxpayer has
previously engaged in similar activities and made them
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