- 12 -
some contain inconsistencies of a significant nature.
Inconsistencies also exist between petitioner's records and the
information contained on some of his tax returns.
In light of the facts before us, we find that petitioner did
not operate his horse activity in a businesslike manner. We also
find that he maintained inadequate and insufficient records with
respect to such activity. Accordingly, we find that this factor
weighs in favor of respondent.
Taxpayer Expertise
The expertise of the taxpayer or his or her advisers is
another factor relevant to the determination of whether such
taxpayer possessed the requisite profit motive with respect to
the activity in question. Sec. 1.183-2(b)(2), Income Tax Regs.
Petitioner lacked any meaningful degree of expertise with regard
to his horse activity, and we are not convinced that he was
developing an expertise merely as a result of his associations
with professionals within the cutting horse industry. However,
petitioner relied extensively on Costello, an individual
possessing much expertise involving horses. Because of the
extent Costello was involved in petitioner's horse activity, we
conclude that this factor favors petitioner.
Time and Effort Expended
The time and effort expended by the taxpayer in carrying on
the activity at issue is an indication of whether a profit motive
existed with respect to such activity, particularly if there are
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011