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reported through the taxable years in question does not reflect
the potential to recoup the claimed losses as Zane contends.
Accordingly, we find this factor to be unfavorable for Zane.
5. Taxpayer’s Success in Similar or Dissimilar Activities--
In addition to his dog breeding activity, Zane operated a cattle
activity that had reported losses. On the other hand, Zane was
vice president of Beneco–-a very successful business operated by
Zane and his family. He did not show that the experience or
success from Beneco was carried over into his dog breeding
activity. For example, there were inadequate records of the
activity. There was no showing that his acquired business
techniques were used to cut costs or improve receipts.
Accordingly, this factor is not favorable to Zane.
6. The Activity’s History of Income and/or Losses--By the
end of 2001, Zane had accumulated losses in an amount approaching
$275,000. By 2004, his losses were approaching $340,000. These
losses were used to offset Zane and Shannon’s other substantial
income. The amount of losses in comparison with revenues does
not show, however, that Zane intended to cut losses or improve
the potential for gain. Although Zane contends that the
potential to recoup the losses and show gain existed, the record
does not support his contention. Accordingly, this factor is
unfavorable for Zane.
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