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ridden around the farm for pleasure. The record shows that
petitioners attended races at the track, watched their horses
race, and also gambled on horses while they were in attendance at
the races. In the final analysis, we are convinced that
petitioners' enjoyment of being engaged in horse racing and
breeding was the most significant reason why they continued to
engage in this activity despite their record of consistent
losses.
Conclusion
Having considered the factors listed in section 1.183-2(b),
Income Tax Regs., all contentions presented by the parties, and
the facts and circumstances of this case, we believe that
petitioners honestly hoped that their horse racing and breeding
activity would generate a profit and that profit was one of their
objectives. However, in order to prevail, petitioners must show
that their horse racing and breeding activity was engaged in
primarily for the purpose of making a profit. Simon v.
Commissioner, 830 F.2d at 500; Warden v. Commissioner, T.C. Memo.
1995-176, affd without published opinion 111 F.3d 139 (9th Cir.
1997).
Petitioners engaged in horse racing and breeding activities
for at least 16 years, losing more than $465,000 without coming
near a profit in any of those years. Petitioners initiated their
activity without developing a business plan commensurate with
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