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loss with respect to the activity; (7) the amount of occasional
profits, if any, which are earned; (8) the financial status of
the taxpayer; and (9) whether elements of personal pleasure or
recreation are involved. Sec. 1.183-2(b), Income Tax Regs.
While the taxpayer's expectation of profit need not be
reasonable, the facts and circumstances must demonstrate that the
taxpayer engaged in the activity, or continued to engage in the
activity, with an objective of making a profit. Golanty v.
Commissioner, 72 T.C. 411, 425-426 (1979), affd. without
published opinion 647 F.2d 170 (9th Cir. 1981); Allen v.
Commissioner, supra at 33; sec. 1.183-2(a), Income Tax Regs. In
determining whether an activity is engaged in for profit, greater
weight is given to objective facts than to the taxpayer's mere
statement of intent. Sec. 1.183-2(a), Income Tax Regs.
Although no one factor is conclusive, evidence that a
taxpayer did not engage in an activity with the objective to earn
a profit, a record of substantial losses over many years, and the
unlikelihood of achieving a profit are important factors bearing
on the taxpayer's true objective. Golanty v. Commissioner, supra
at 426; sec. 1.183-2(b)(6), Income Tax Regs. Petitioners have
the burden of proof on this issue. Rule 142(a).
Petitioners argue, among other things, that they conducted
their horse breeding and horse racing activities in a
businesslike manner, that they made appropriate adjustments to
the manner in which they operated both activities, and that they
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