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"business practices": Using business stationery, advertising
their farm at horse conventions and seminars (including
displaying their portrait of Bella Joya and showing a video of
Bella Joya's races), and participating in various horse
associations. Respondent, however, argues that such practices do
not counter "the unbusinesslike way in which petitioners have
made the major decisions about the conduct of their activity."
Respondent argues that petitioners had no financial plan or
written budget for the horse activity and that petitioners never
attempted to calculate the income that was required to produce a
profit for any year, or the projected income that would be
required in future years to produce a profit. Additionally,
respondent contends that petitioners never calculated the cost of
each component of their horse activity, or the cost of their
horse activity on a per horse basis, in order to determine
possible cost-cutting measures. Finally, respondent argues that
petitioners, after they began to incur losses, made no effort to
consult experts on how to change their operations to cut costs
and increase profits.
In the instant case, we conclude that petitioners carried on
their horse activity in a businesslike manner. Petitioners
engaged in the business practices discussed above. Additionally,
although they produced no financial plan or written budget,
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