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provided notices and narratives about every horse to potential
purchasers. Based on the facts of this case, we find that Mr.
Morley carried on the horse-breeding activity in a businesslike
manner, and this indicates a profit motive.
B. Expertise of Mr. Morley and His Advisers
A taxpayer's expertise, research, and study of an activity,
as well as his consultation with experts, may be indicative of a
profit motive. Sec. 1.183-2(b)(2), Income Tax Regs. Respondent
argues that the type and quality of advice sought by Mr. Morley
was not indicative of an intent to engage in an activity for
profit.
Prior to 1985, Mr. Morley had no knowledge about breeding
Arabian horses. Initially, he discussed the Arabian horse-
breeding business with Mr. Horton. Mr. Horton had been in the
horse-breeding business for many years and the community regarded
him as having a quality reputation for his knowledge of the
business operations and the area horse market. Mr. Horton
provided projections to Mr. Morley of the potential profit from
the horse-breeding activity. Additionally, Mr. Horton assisted
Mr. Morley's entry into Arabian horse breeding.
Mr. Morley also consulted with other horse breeders and read
journal articles for information about horse breeding. He
8(...continued)
country to mean that people located in this part of the country
are devoted fans of the University of Tennessee.
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