- 20 -
petitioners did not consistently rely on the advice of their
expert, McDannald. Respondent contends that, although
petitioners relied on McDannald to advise them about training,
breeding, and showing their horses, their principal adviser and
decision maker for buying and selling Arabian horses was Mrs.
Davis.
We disagree. At trial, petitioner testified that Mrs. Davis
made decisions as to acquisitions of property. We construe this
to mean that she made decisions to buy real property, not horses.
Petitioners sought and relied on the advice of McDannald, a
nationally known trainer of Arabian horses, about which horses to
buy. For example, McDannald advised petitioners to buy
Splendante in 1993. McDannald, however, did not advise
petitioners how to make a profit.
This factor is neutral.
3. Taxpayer's Time and Effort
The fact that a taxpayer devotes much time and effort to
conducting an activity may indicate that he or she has a profit
objective. See sec. 1.183-2(b)(3), Income Tax Regs. Petitioners
spent a substantial amount of time and effort on their Arabian
horse activity. Respondent concedes that this factor favors
petitioners.
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011