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property by building a lake, a three-car garage, exercise
facility, barn stalls, and run-in sheds. These expenditures
during a market decline are inconsistent with petitioner’s
assertion that circumstances beyond his control contributed to
his losses.
The market for Arabian horses began to rebound in 1991 and
1992. Nevertheless, petitioner continued to sustain losses.
During the market upswing, petitioner sold La Quintina for
$2,000, Lucy in Disguise for $5,000, and Pro Gato for $47,500.
Petitioner received $54,500 from the sale of these three horses,
but he paid Mr. Dahart $22,500 in commissions.16 Selling horses
during a market upswing and paying 41.28 percent17 in cumulative
commissions when the standard commission was between 10 and 15
percent indicate that petitioner’s activity was not engaged in
primarily for profit.
Petitioner also argues that he lost several Arabian horses
and that some of his horses experienced infertility problems.
However, according to petitioner’s own testimony, he has been
very fortunate with regard to unexpected problems with his
16Petitioner also paid Stachowski Farms a $7,125 commission
on the sale of Pro Gato. In combining the commission paid to Mr.
Dahart and Stachowski Farms, petitioner paid a 55-percent
commission on the sale of Pro Gato.
17The 41.28 percent does not include the $7,125 commission
that petitioner paid Stachowski Farms in addition to the $19,000
commission paid to Mr. Dahart for the sale of Pro Gato.
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