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expectation that the assets used in the activity may appreciate
in value; (5) the success of the taxpayer in carrying on other
similar or dissimilar activities; (6) the taxpayer's history of
income or losses with respect to the activity; (7) the amount of
occasional profits, if any, that are earned; (8) the financial
status of the taxpayer; and (9) the elements of personal pleasure
or recreation involved in the activity.
A careful review of the entire record in this case convinces
us that petitioner has failed to carry his burden in proving that
his horse activity was motivated by an actual and honest
objective of making a profit. The objective facts indicate that
most of the above-enumerated factors weigh in favor of
respondent.
Issue 1. Profit Motive
Businesslike Manner & Adequate Records
The fact that an activity is carried on in a businesslike
manner and complete and accurate books and records are maintained
is a factor indicating the existence of a profit objective with
respect to such activity. 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 advances several contentions.5 First, respondent
argues that petitioner failed to conduct a formal market study
5To the extent that such arguments are not addressed herein,
we have found them to be without merit.
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