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had not been sold to recuperate, and start training another
string of horses for the summer selling season. This string was
not of the same quality as the Florida horses, because the level
of play at the summer selling clubs was not as high, and second-
tier purchasers were not willing to spend as much money.
Petitioner and S.K. Johnston would meet with Atkinson at
the beginning of each year to discuss the selling strategy during
the upcoming season. During this time the three of them would
decide which clubs and tournaments Atkinson would travel to based
on the caliber of clientele attending. Atkinson knew the level
of players at the various clubs and tournaments and what the
purchasers at those events would be willing to spend. Based on
that information, petitioner, S.K. Johnston, and Atkinson decided
which ponies Atkinson would take with him to Florida. They would
also prepare a budget for the upcoming sales season.
During the years at issue, BPS made additional income from
an annual sponsorship fee that Coca-Cola Co. paid the partnership
to put together a polo team to play in matches.
BPS faced a history of losses. After losing its key
employee, BPS sold off the remaining horses and in 1993 the
partnership was dissolved.
Discussion
Once again, respondent points to a history of losses,
petitioners use of such losses to offset other income, and the
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