Geraldine H. Pearson - Page 13

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          indicate that he or she has a profit objective, even though the             
          activity is presently unprofitable.  Sec. 1.183-2(b)(5), Income             
          Tax Regs.                                                                   
               Petitioner points out that she has successfully managed                
          horse shows and trials, worked on farms in Oregon and Montana,              
          acted as an agent in the sale of cattle, sheep, and horses,                 
          managed a 2,000-head experimental goat herd for the Oregon Health           
          Sciences Center, raised and sold horses to the American Olympic             
          Team, and was nominated for the American Olympic Equestrian Team.           
               Petitioner has had many impressive accomplishments.                    
          However, she has not shown that she operated businesses                     
          profitably or converted similar activities from unprofitable to             
          profitable.  Sec. 1.183-2(b)(5), Income Tax Regs.  Petitioner has           
          not introduced any credible evidence that any of her prior                  
          endeavors were financially successful.                                      
               This factor favors respondent.                                         
               5.  Taxpayer's History of Income or Losses                             
               A history of substantial losses may indicate that the                  
          taxpayer did not conduct the activity for profit.  Golanty v.               
          Commissioner, 72 T.C. at 427; sec. 1.183-2(b)(6), Income Tax                
          Regs.  However, a taxpayer may have a profit objective even if              
          the activity has a history of losses without any profit.                    
          Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965), affd. 379               
          F.2d 252 (2d Cir. 1967).                                                    
               Petitioner's farm generated substantial losses.  From 1985             
          to 1993, petitioner's farm lost $178,486 not counting                       

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