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Pirnia v. Commissioner, T.C. Memo. 1989-627; sec. 1.183-2(b)(1),
Income Tax Regs.
Respondent argues that petitioner failed to operate his
horse activity in a businesslike manner. In support of this
argument, respondent contends that petitioner lacked a credible
business plan and points to occasional inconsistencies in
petitioner's testimony. We know of nothing in the Code,
regulations, or case law that requires a business plan with the
degree of formality alluded to by respondent. Petitioner's
activity spanned a period of years. Petitioner initially placed
emphasis on horseracing but eventually shifted his emphasis to
horse breeding after coming to the realization that he was not
well situated to prosper in an activity which heavily emphasized
racing. With regard to the inconsistencies identified by
respondent, most, if not all, appear attributable to petitioner's
effectuating the shift from racing to breeding over a period of
time rather than at a specific point in time.
Respondent further contends that petitioner's lack of formal
financial records evidences his lack of a profit objective.
While it is true that the maintenance of complete and accurate
books and records weighs in favor of finding the existence of a
profit objective, the absence of such books and records does not
conclusively establish the lack of a profit objective. See
Engdahl v. Commissioner, supra at 666-667. In any event,
petitioner maintained meticulous records regarding the training
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