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that the value of his horses would appreciate. The appreciation,
however, is not instantaneous; it is gradual, often occurring
over many years. The caliber of petitioner's existing stock had
to be established. Once the grade and the quality of
petitioner's stock were established, offspring had to be
generated and trained. Petitioner endeavored to produce quality
genetics in his foals, and then to further develop his foals
through his training regimen. It was through a combination of
this selective breeding and proper training that petitioner
expected the value of his horses to appreciate.
Although, as respondent correctly points out, petitioner had
yet to sell any of his foals prior to the time of trial, this
fact alone is not determinative and does not diminish
petitioner's expectation. Actual success need not exist for us
to find that petitioner maintained a reasonable expectation that
his horses would appreciate in value. Accordingly, we find that
this factor supports petitioner.
Fifth, the success of the taxpayer in carrying on other
activities can be some indication of whether the taxpayer had a
profit objective for the activity in question. Hoyle v.
Commissioner, T.C. Memo. 1994-592; Pirnia v. Commissioner, T.C.
Memo. 1989-627; sec. 1.183-2(b)(5), Income Tax Regs. The record
lacks sufficient evidence regarding petitioner's experience in
other activities. Nevertheless, we find that this lack of
evidence neither supports nor weakens petitioner's position.
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