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Single Activity
Before determining whether, and to what extent,
section 183 and the regulations thereunder apply, the
activity or activities of the taxpayer must be ascertained.
Sec. 1.183-1(d)(1), Income Tax Regs. In making this
determination, the general rule is that we must take all
the facts and circumstances of the case into account.
Id. The regulations provide as follows:
In ascertaining the activity or activities of
the taxpayer, all the facts and circumstances of
the case must be taken into account. Generally,
the most significant facts and circumstances in
making this determination are the degree of
organizational and economic interrelationship
of various undertakings, the business purpose
which is (or might be) served by carrying on
the various undertakings separately or together
in a trade or business or in an investment
setting, and the similarity of various under-
takings. Generally, the Commissioner will accept
the characterization by the taxpayer of several
undertakings either as a single activity or as
separate activities. The taxpayer's characteri-
zation will not be accepted, however, when it
appears that his characterization is artificial
and cannot be reasonably supported under the
facts and circumstances of the case. [Id.]
Petitioners characterize all of the undertakings
relating to their horse breeding and boarding, including
holding the land on which those undertakings were
conducted, as a single activity for section 183 purposes.
Respondent, on the other hand, contends that petitioners'
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