Richard J. and Melodie D. McKeever - Page 24




                                               - 24 -                                                  
            any, which are earned; (8) the financial status of the taxpayer;                           
            and (9) elements of personal pleasure or recreation.  No single                            
            factor is determinative, see sec. 1.183-2(b), Income Tax Regs.,                            
            and not all factors are applicable in every case; see Allen v.                             
            Commissioner, 72 T.C. 28, 34 (1979).                                                       
                  Petitioners assert that breeding and raising horses for                              
            sale has long been recognized as a trade or business meeting the                           
            profit requirements for deductibility, that a history of losses                            
            during the startup phase of their enterprise does not vitiate                              
            their profit motive, and that the objective facts demonstrate                              
            that they had the requisite profit objective.  Conversely,                                 
            respondent argues that the evidence demonstrates a lack of profit                          
            motive and that petitioners’ horse activity was not engaged in                             
            primarily for profit.                                                                      
                  B.  Applying the Factors                                                             
                  1.  Manner in Which Activity Conducted                                               
                  In deciding whether a taxpayer has conducted the activity                            
            in a businesslike manner, we consider whether complete and                                 
            accurate books and records were maintained, whether the activity                           
            was conducted in a manner substantially similar to other                                   
            activities that were profitable, and whether changes in operating                          
            methods, adoption of new techniques, or abandonment of                                     
            unprofitable methods were made in a manner consistent with an                              








Page:  Previous  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  Next

Last modified: May 25, 2011