James C. Vallette and Arleen R. Vallette - Page 9

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          the economic aspects of breeding cattle; i.e., on how to make the           
          activity profitable, see Burger v. Commissioner, 809 F.2d at 359;           
          (2) read any literature on the business side of breeding cattle;            
          (3) performed any meaningful economic study on the profit                   
          potential of breeding cattle; (4) prepared any market analysis on           
          breeding cattle; (5) established a meaningful breeding plan; or             
          (6) studied, or consulted with professionals on, the magnitude of           
          expenses which they were likely to encounter.                               
               This factor favors neither party.  We consider it neutral.             
               3.  Time and effort spent in conducting the activity                   
               We consider the time and effort spent by petitioners in                
          conducting their activity.  See sec. 1.183-2(b)(3), Income Tax              
          Regs.  The fact that a taxpayer devotes much of his or her                  
          personal time to an activity may indicate a profit intent.  The             
          failure of a taxpayer to devote substantial time to an activity             
          weighs against a profit objective, unless, for example, the                 
          taxpayer employs capable personnel to conduct the activity in his           
          or her stead.  Employing capable personnel shows a profit intent.           
               Petitioners have not persuaded us that they spent much time            
          in their breeding activity during the subject years.  Although              
          the record contains some testimony establishing that petitioners            
          and their relatives devoted time to the activity during the                 
          subject years, we are not persuaded that this aggregate time                

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