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In light of the record before us, we conclude that
petitioner has developed and maintained expertise involving
horses. Accordingly, we find that this factor weighs heavily in
favor of petitioner.
Third, the time and effort expended by the taxpayer in
carrying on the activity is an indication of whether a profit
objective existed, particularly if there are no substantial
personal or recreational elements associated with the activity.
Haladay v. Commissioner, T.C. Memo. 1990-45; Archer v.
Commissioner, T.C. Memo. 1987-70; sec. 1.183-2(b)(3), Income Tax
Regs. As was stated by the Court of Appeals for the Seventh
Circuit: "Common sense indicates to us that rational people do
not perform hard manual labor for no reason, and if the
possibility that petitioners performed these labors for pleasure
is eliminated the only remaining motivation is profit."
Nickerson v. Commissioner, 700 F.2d 402, 407 (7th Cir. 1983),
revg. T.C. Memo. 1981-321.
Although the record does not support a finding of the exact
amount of time petitioner spent working with his horses, we are
convinced that it was substantial. Moreover, respondent concedes
on brief that petitioner spent a substantial amount of time and
effort engaged in his horse activity. Petitioner did not own a
farm or stable at which he could keep his horses; rather, he
rented space at a boarding facility located a significant
distance from his residence. Petitioner testified that he spent
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