- 23 -
that such matters were of relative indifference to them when
compared to the management and care of the horses themselves."
Alternatively, respondent argues that petitioners did not
establish that they consulted experts one-on-one regarding the
business aspects of raising horses.
Petitioners argue that they knew the business and economic
aspects of their horse activity. Petitioners contend that they
have spent a considerable amount of time and effort to learn
about the Arabian horse and quarter horse industries by attending
seminars at conventions and colleges. Additionally, petitioners
made a budget, estimated when the horse activity would be
profitable, and determined the costs per horse per month.
Petitioners also contend that Mrs. Phillips herself is an
expert in horse breeding. Additionally, in the positions that
she held, Mrs. Phillips met agriculture teachers, college
professors, and 4-H people, with whom she discussed horse
breeding issues. Finally, petitioners argue that they consulted
with experts at horse conventions, where there were marketing and
management seminars.
The regulations provide that consulting with experts
regarding an activity's accepted practices may indicate that the
taxpayer has a profit motive where the taxpayer carries on the
activity in accordance with such practices. Sec. 1.183-2(b)(2),
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011