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indicating profit objective with those indicating the lack of
such objective. Sec. 1.183-2(b), Income Tax Regs.
If gross income derived from a horse training or breeding
activity for 2 or more taxable years in a period of 7 consecutive
taxable years exceeds the deductions attributable to such
activity, then the activity is presumed to be an activity engaged
in for profit. Sec. 183(d). In the instant case, as gross
income from the activity did not exceed deductions from the
activity during any of the years in issue, petitioners are not
entitled to the presumption that their horse activity was engaged
in for profit. Consequently, we address the aforementioned
factors to decide whether petitioners engaged in their horse
activity with an actual and honest profit objective during the
years in issue.
The manner in which petitioners carried on their horse
activity indicates that they engaged in the activity with the
requisite profit objective. The regulations provide that
"The fact that the taxpayer carries on the activity in a
businesslike manner and maintains complete and accurate books and
records may indicate that the activity is engaged in for profit."
Sec. 1.183-2(b)(1), Income Tax Regs. As to whether petitioners
carried on their horse activity in a businesslike manner,
respondent concedes that petitioners engaged in the following
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