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expenses in all years. Even assuming that petitioners were able
to reduce their board and veterinary expenses to zero for all
years, total losses would have only been reduced by approximately
40 percent. In the face of successive or increasing losses,
petitioners have failed to materially alter their operations or
their prospects of generating profits. Golanty v. Commissioner,
supra at 428.
Expertise
Preparation for an activity by extensive study of its
accepted business, economic, and scientific practices, or
consultation with those who possess expertise in the activity,
may indicate that the taxpayer has a profit objective. Sec.
1.183-2(b)(2), Income Tax Regs.
Mr. Taras grew up on a farm and worked with horses during
those years. Mr. Taras also became a member of the Pennsylvania
Breeders Association and educated himself through industry
publications. Petitioners sought out, consulted with, and hired
professional racehorse trainers and breeders throughout the years
of operation of their activity. Petitioners followed the advice
of Ms. Audrey Kraynik, who represented that she was a licensed
trainer experienced in training racehorses. With respect to the
breeding of their horses, petitioners consulted with two horse
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