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for a profit, even though the activity is presently unprofitable.
See sec. 1.183-2(b)(5), Income Tax Regs.
Petitioners presented no evidence of experience in the
animal breeding business before ERE. However, petitioners argue
that Dr. Knudsen’s successful medical practice evidences
petitioners’ expectation that ERE could be successful.
Although Dr. Knudsen’s medical practice was profitable, Dr.
Knudsen’s success relates to his extensive education and training
in the medical profession. In addition, the record does not
indicate whether Dr. Knudsen’s medical practice was converted
from an unprofitable to a profitable business. Thus, we are
unable to conclude that petitioners’ success with Dr. Knudsen’s
medical practice is probative of petitioners’ profit motive with
regard to ERE.
This factor is neutral.
6. Petitioners’ History of Income or Loss From the
Activity
A taxpayer’s history of income or loss with respect to any
activity may indicate the presence or absence of a profit
objective. See Golanty v. Commissioner, 72 T.C. at 426; sec.
1.183-2(b)(6), Income Tax Regs. “[A] series of startup losses or
losses sustained because of unforeseen circumstances beyond the
control of the taxpayer may not indicate a lack of profit
motive.” Kahla v. Commissioner, T.C. Memo. 2000-127 (citing
Engdahl v. Commissioner, 72 T.C. at 669, and sec. 1.183-2(b)(6),
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