- 7 -
upon a taxpayer's mere statements of intent. Dreicer v.
Commissioner, supra at 645. Nevertheless, there is no
requirement that the taxpayer reasonably expect profits from the
activity in question. Elliott v. Commissioner, 90 T.C. 960, 970
(1988), affd. without published opinion 899 F.2d 18 (9th Cir.
1990). Section 1.183-2(b), Income Tax Regs., provides nine
factors to be considered when determining whether an activity is
engaged in for profit. These are: (1) The manner in which the
taxpayer carries on the activity; (2) the expertise of the
taxpayer or his advisors; (3) the time and 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 other similar or
dissimilar activities; (6) the taxpayer's history of income or
losses with respect to the activity; (7) the amount of occasional
profits, if any, which are earned; (8) the financial status of
the taxpayer; and (9) the elements of personal pleasure or
recreation that may be present. No single factor is controlling.
Abramson v. Commissioner, 86 T.C. 360, 371 (1986); sec. 1.183-
2(b), Income Tax Regs. We will separately discuss each factor.
1. The Manner in Which Petitioners Carried On the Horse-
Breeding Activity
Taxpayers who carry on the activity in question in a
businesslike manner, and maintain complete and accurate books and
records, are more likely to establish that the activities in
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