- 25 -
years in issue. Thus, appreciation in the value of the
land used in the activity helps to explain petitioners'
willingness to continue their horse breeding and boarding
operation despite the operating losses sustained during the
years in issue. Cf. Allen v. Commissioner, 72 T.C. at 36.
This is strong evidence that petitioners conducted that
activity with an honest and actual objective of making a
profit. See, e.g., id.; Fields v. Commissioner, T.C. Memo.
1981-550; Sanderson v. Commissioner, T.C. Memo. 1964-284.
5. Success in Similar or Dissimilar Activities
Petitioners both testified that they had been
involved in purchasing, breeding, training, and selling
horses in the past. While there is no evidence in the
record to substantiate their success in these activities,
we find their testimony to be credible. There is no
evidence that Mr. Perry or Ms. Hofer was successful in
any dissimilar investment or business activities.
6. History of Income or Losses
Petitioners reported a net loss from their horse
activity during each of the years in issue. We also note
that petitioners suffered 2 years of extreme drought,
during which they were unable to produce their own feed,
the market price of feed increased, and the market for
horses decreased. Cf. Fields v. Commissioner, supra. We
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011