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Mr. Hightower $19,432 to train and show their horses at
competitions, which amount equals approximately 38 percent of
their net loss of $51,295. Both Mr. Hightower and Mr. Wilson
testified that training income was an important component in
meeting their expenses. Had petitioners generated training
income instead of expense, they may have shown a profit. In any
event, the fact that training for petitioners was a significant
expense rather than a source of income distinguishes their horse-
related activities from the profitable cutting horse operations
in evidence.
Finally, there is evidence that petitioners conducted their
horse-related activities in an unbusinesslike manner. First,
petitioners purchased Miss Doc Chic for a nominal sum ($100) in
1992 and resold her to the seller 18 months later for the same
amount. Forgoing the right to any appreciation in value while
paying (and deducting) the horse's training and competition
expenses was not a businesslike transaction. Petitioners'
explanation for this transaction is that it was the most cost
effective means of providing Mrs. Sullivan with a horse on which
to compete in 1992 to keep her riding skills honed because their
prize stallion (Colonel Rey Lew) was being ridden in competition
by Mr. Hightower that year. Although there is evidence in the
record that a cutting horse's full value is demonstrated by its
performance with both professional and nonprofessional riders,
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