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ranch manager of Rancho del Charro, where petitioners board their
horses, supervised approximately 200 racehorses, of which 23 belonged to
petitioners. Prior to coming to Rancho del Charro in 1992, Adams worked
for 20 years for another horse breeder. Petitioner spent a substantial
amount of time consulting and conversing with both Bonde and Adams
regarding his horse activities. Petitioner's consultation with experts
indicates a profit motive.
Petitioner is retired from his cotton processing business and is
therefore able to devote a substantial amount of time to the horse
activities. Petitioner personally visits the facilities where his horses
are boarded and trained in order to inspect, the condition of the horses
and to consult with the caretakers and trainers. Including the time
spent driving between his home and the boarding facilities, petitioner
spends at least 4 hours a day, 6 days a week; inspecting his horses and
consulting with their trainers. Bonde, petitioners' horse. trainer,
testified "[Petitioner] is very active. He's there very regularly,
probably more than most of the clients I train for, actually. I don't
ever remember him missing a race, and he comes out and inspects his
horses at least five times a week." Adams, petitioners' ranch manager,
testified that petitioner spends much time with his horses and that
petitioner "examines all of his horses and feeds some of them, doctors
them, cleans water troughs, [and] picks up rocks." The substantial
amount of time and effort expended by petitioner in the horse
activities indicates a profit motive. Sec. 1.183-2(b)(3), Income
Tax Regs.
A record of substantial losses over several years may be
indicative of the absence of a profit motive. Sec. 1.1832(b)(6),
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