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substantial, falls far short of the accumulated losses of their
horse-related activities. Their cumulative losses during the
period 1989-95, the years in which Colonel Rey Lew has been old
enough to compete, total $279,270. With losses averaging $40,000
annually over the last 7 years, we are not persuaded that
petitioners have a realistic prospect of recouping their losses
in the future or, based on this record, much prospect of even
stemming annual losses.
Petitioners appear to argue that their 23 years of losses
can be attributed to a startup period in the 1970's, a period of
mishaps in the 1980's involving Docs Fancy Feat, and the
resumption of a new startup period with Colonel Rey Lew
commencing in the late 1980's which will eventually produce
profits. By this logic, if Colonel Rey Lew were injured,
petitioners could begin anew with another horse and incur losses
for another decade without creating an inference that a profit
motive was lacking. We do not believe that petitioners have
satisfactorily accounted for their history of substantial losses.
Losses in 23 of 26 years, that can only partially be attributed
to unforeseen circumstances, create a strong inference that an
activity was not engaged in for profit. Golanty v. Commissioner,
72 T.C. at 427. Petitioners' expressed intention to continue
their activities in the face of these losses reinforces the
inference. Cf. Engdahl v. Commissioner, 72 T.C. at 669
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