- 7 - bank account for the Activity. Further, petitioners abandoned the Arabian horse breeding business when Mr. Dawson realized that it would be unprofitable. Petitioners then sought a more profitable enterprise and decided to breed paint horses. Their goal was to develop Hot Twist into a marketable stud. Respondent contends that petitioners did not use business records to evaluate the financial status of the Activity. We conclude that this contention does not necessarily undermine petitioners' position. Petitioners owned only three horses. They employed only one trainer at a time, and only one horse was shown in 1988. No horses were shown in 1989. We believe that petitioners were adequately aware of the results of their rather simple operation. Their failure to establish that they analyzed their books and records is not determinative of this issue. II. Expertise Preparation for an activity by extensive study of its accepted business, economic, and scientific practices, or consultation with those who possess expertise in the activity, may indicate that the taxpayer has a profit objective. Sec. 1.183-2(b)(2), Income Tax Regs. Respondent contends that petitioners did not consult experts for advice regarding the operation of the Activity. We, however, believe Mr. Barton's uncontradicted testimony that petitioners sought and received his advice. While Mr. Dawson was not an expert in the training, breeding, or showing of horses, hePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
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