James C. Vallette and Arleen R. Vallette - Page 6

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          effort expended by the taxpayer in carrying on the activity;                
          (4) the expectation that assets used in the activity may                    
          appreciate in value; (5) the success of the taxpayer in carrying            
          on similar or dissimilar activities; (6) the taxpayer's history             
          of income or losses in 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.  Westbrook v. Commissioner, supra at 876; sec.                  
          1.183-2(b), Income Tax Regs.  None of these nine factors is                 
          dispositive, in and of itself, and a decision does not rest on              
          the number of factors satisfied.  Golanty v. Commissioner, supra            
          at 426; sec. 1.183-2(b), Income Tax Regs.  We assess each factor            
          with the aid of our common sense, and we bear in mind the insight           
          that we have gained from a lifetime of experience, as well as our           
          understanding of how the relevant statutory scheme was meant to             
          apply to the facts at hand.  Ranciato v. Commissioner, 52 F.3d              
          23, 25-26 (2d Cir. 1995), remanding T.C. Memo. 1993-536.                    
               Bearing these basic principles in mind, we turn to the nine            
          factors, analyzing and discussing them one at a time.                       
               1.  Manner in which the activity is conducted                          
               We consider the manner in which petitioners conducted their            
          breeding activity.  See sec. 1.183-2(b)(1), Income Tax Regs.                
          Objective facts showing that a taxpayer carries on an activity in           
          a businesslike manner are indicative of a profit intent.  The               
          same is true with respect to the maintenance of complete and                

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