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10-year startup phase identified above. Accordingly, we find
that petitioner's history of losses does not establish that he
lacked the requisite profit objective.
Seventh, the amount and frequency of occasional profits
earned from the activity may also be indicative of a profit
objective. Golanty v. Commissioner, 72 T.C. at 427; sec. 1.183-
2(b)(7), Income Tax Regs. Other than the occasional cash awards
received from racing his horses, petitioner's horse activity
produced no income. However, an opportunity to earn a
substantial ultimate profit in a highly speculative venture may
be sufficient to indicate that the activity is engaged in for
profit even though only loses are generated. Pirnia v.
Commissioner, supra; sec. 1.183-2(b)(7), Income Tax Regs. The
business of breeding and racing horses is undoubtedly highly
speculative and risky. Nevertheless, petitioner aspired to be a
successful breeder of horses. It was petitioner's objective to
eventually produce horses capable of competing in a triple crown
race. Furthermore, petitioner had hoped that his activity would
at least be successful enough to facilitate his purchase of a
farm from which he could operate the activity. Accordingly, we
find that petitioner's failure to make occasional profits is not
a determinative factor in this case.
Eighth, the lack of substantial income from sources other
than the activity in question may indicate the existence of a
profit objective. Pederson v. Commissioner, T.C. Memo. 1994-555;
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