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not engaged in selling ponies for profit. We disagree. BPS did
not spend a lot of money on advertising through conventional
means, such as listing ads in various horse magazines. BPS did,
however, expend substantial sums on registration fees to enter
its horses into tournaments. Respondent concedes that polo
ponies are generally sold in private transactions where the
prospective purchaser tries out the pony by riding it and playing
it in a polo game. Accordingly, petitioner and Atkinson believed
that the best advertising strategy was to show a horse's
abilities either by allowing a prospective purchaser to ride the
horse during a polo game, or by playing a horse in a highly
visible tournament where purchasers pay high stakes for horses
that play well. Thus, BPS' advertising plan was to establish
credibility and make itself known by high level, visible
tournament play.
That petitioner and S.K. Johnston devoted ample time to BPS
is further evidence of a profit motive. At the beginning of each
year, they met with Atkinson to discuss strategies for the
upcoming season. They planned the clubs and tournaments that
Atkinson would travel to, decided which ponies Atkinson would
take with him to Florida, and prepared a budget for the upcoming
sales season which petitioner reviewed throughout the year.
Finally, that BPS was ultimately liquidated in 1993, after
losing its key employee and facing a history of losses is
additional evidence that the activity was not a hobby. "If the
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