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Income Tax Regs. Mrs. Phillips has served as a District Director
and as the Chairman of the Racing Committee for the Virginia
Arabian Horse Association. Additionally, Mrs. Phillips has
conducted racing seminars at various conventions and written a
column answering questions in The Virginia Horse Trader.
Moreover, petitioners consulted with experts at horse convention
seminars. Accordingly, Mrs. Phillips' expertise in the horse
activity and petitioners' consultation with experts are facts in
petitioners' favor.
Section 1.183-2(b)(3), Income Tax Regs., provides that
The fact that the taxpayer devotes much of his personal
time and effort to carrying on an activity,
particularly if the activity does not have substantial
personal or recreational aspects, may indicate an
intention to derive a profit. * * *
Respondent concedes that this factor "superficially favors
petitioners" but argues that there are "substantial pleasure or
recreational aspects" to their horse activity.
Mr. Phillips is employed full time as a nurse anesthetist.
Generally, however, he works 10 to 15 hours per week in
petitioners' horse activity, primarily taking care of the horses.
He also attends seminars and conventions dealing with
petitioners' horse activity.
Mrs. Phillips works full time in the horse activity,
generally spending 35 to 40 hours per week. In addition to being
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