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horse operation were a mere hobby, activity for pleasure, or a
business founded solely for tax benefits, it would not seem
petitioner would entirely abandon the operation." Trafficante v.
Commissioner, T.C. Memo. 1990-353.
Thus, based on the entire record we find that petitioners,
through BPS, operated their horse sales activity with the intent
to make a profit. Accordingly, petitioners' related losses for
the years in issue are deductible.
Issue 4. Whether Gillian Johnston's Horse Training Activity Known
as GJ Stables, Conducted at Bendabout Farm, Was an Activity
Engaged in For Profit
GJ Stables
During the years in issue, Gillian Johnston, a licensed
steeplechase horse trainer since 1964, operated a steeplechase
training and racing activity known as GJ Stables out of a
converted cow barn and pasture on approximately 35 acres at
Bendabout farm. Gillian Johnston has had one assistant for at
least 8 years. Respondent stipulated that petitioners employed
competent help to carry on the horse training and racing
activities of the stable.
Unlike a breeding stable which makes money by selling
horses, a racing stable such as GJ makes money primarily by
racing its horses to win purses. There is, however, always the
possibility that a very successful racing horse may be purchased.
In operating the stable, Gillian Johnston consulted with
recognized experts in the steeplechase business, including Dr.
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