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pleasure aspect of the activity to establish that petitioners did
not have a profit objective.9
The parties stipulated that petitioners carried on their
horse sales activity through BPS in a businesslike manner,
maintained complete and accurate books and records, and employed
expert advisers and competent help in operating BPS. Atkinson,
BPS' primary adviser, was a seven-goal professional polo player
and horse trainer, who owned a profitable pony polo sales
business for many years prior to coming to work for BPS.
Moreover, petitioner himself had extensive knowledge in this
field. As a longtime amateur polo player and past president and
chairman of the U.S. Polo Association, petitioner developed polo
contacts worldwide. Based on his knowledge of polo and his
contacts with people involved in the sport, petitioner thought he
could make a profit selling polo ponies. Respondent concedes
that petitioner's contacts in the polo community were helpful in
selling horses. Moreover, petitioner knew inexpensive sources of
supply for polo ponies in Argentina. Thus, BPS' strategy was to
purchase horses cheaply, train them, and sell them at a profit.
Respondent argues that BPS' failure to spend more than
minimal funds on advertising is persuasive evidence that BPS was
9 For 1987 and 1989, the term petitioners in this context
refers to petitioner and Gillian Johnston and S.K. Johnston and
Julie Boyle. For 1988, Gillian Johnston filed a separate return
and a notice of deficiency was not issued to her with respect to
BPS. Accordingly, for 1988, the term petitioners in this context
refers to only petitioner, S.K. Johnston, and Julie Boyle.
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