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5. Taxpayer's Success in Other Activities
Petitioners had not previously engaged in similar business
activities. This factor favors respondent.
6. Taxpayer's History of Income or Losses
Petitioners had losses from their horse and rodeo activity
in 1991 and 1992. However, those were their first 2 years, and
several events occurred beyond their control such as the fescue
virus, untimely death of some of their horses, and Bumgarner's
improper conduct. Losses sustained because of circumstances
beyond the taxpayer's control do not indicate that the taxpayer
lacked a profit objective. Sec. 1.183-2(b)(6), Income Tax Regs.
Respondent contends that the death and illness of some of
petitioners' horses and Bumgarner's bad conduct were due to
petitioners' absences. We disagree. Petitioners reasonably
relied on Bumgarner. Their presence would not have prevented the
fescue problem or the deaths of their horses. We conclude that
this factor is neutral.
7. Amount of Occasional Profits, if Any
Petitioners discontinued their horse and rodeo activity
after 2 years. We conclude that this factor is neutral.
8. Financial Status of the Taxpayer
Petitioners' losses sheltered a large amount of their income
in 1991 and 1992. This factor favors respondent.
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