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constitute a business plan, even if there is no written plan.
See Phillips v. Commissioner, T.C. Memo. 1997-128 (written
financial plan not required for 32 horse farm where business plan
evidenced by action). Petitioners' business plan was evidenced
by their actions: Petitioners consulted with experts, built a
barn and arena, hired Bumgarner and professional rodeo producers,
bought mares in foal, registered their horses with the American
Quarter Horse Association, and advertised. This factor favors
petitioners.
2. The Expertise of the Taxpayers or Their Advisors
Petitioners consulted with many people before beginning
their horse and rodeo activity, including professional rodeo
producers, local cowboys, a quarter horse expert, accountants,
and bankers. They hired professional rodeo producers and
Bumgarner to serve as a farm manager and trainer. A taxpayer's
continuous and informal consultation with experts such as
veterinarians, horse trainers, and other horse owners was a
factor that showed that the taxpayers had a profit motive.
Engdahl v. Commissioner, 72 T.C. at 668.
Respondent points out that petitioners did not pay for the
advice that they received from people in the horse business. We
do not think that this is unusual for a new business.
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