Michael T. Shane - Page 15

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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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