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property. Moreover, petitioners had two minor children
during each of the years in issue. We find that
petitioners did not have substantial income or capital
from sources other than their horse breeding and boarding
activity during the years in issue.
9. Elements of Personal Pleasure or Recreation
Petitioners argue that they did not derive significant
personal pleasure or recreational benefits from their horse
breeding and boarding operation. Petitioners point out that
their entire experience with horses was purely commercial,
and that they did not participate in any horse shows during
the years in issue. Petitioners also point out that Big
Shot had a bronchial condition which caused him to be too
dangerous to ride. Moreover, petitioners fed their horses
alfalfa, which they contend made the horses unfit for
riding, and did not shoe any of their horses. We find
petitioners' testimony credible in this regard and find that
they did not ride their horses for pleasure or recreation.
However, petitioners both clearly enjoyed working with
horses and certainly derived some personal enjoyment from
their horse breeding and boarding activity.
Upon consideration of all the facts and circumstances
of this case, we conclude that petitioners engaged in their
horse breeding and boarding activity with an honest and
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