- 5 -
total income (loss), taxable income (loss), and Federal tax
liability:
1990 1991 1992 1993 1994
Pension income $20,511 $22,314 $22,504 $23,584 $25,114
Self-employment income 24,937 22,450 21,092 13,317 6,819
Capital gain income none none none 38,500 none
Farm income (loss) (46,475) (60,224) (32,203) (39,302) (50,786)
Total income (loss) (919) (13,628) 11,394 41,808 (18,489)
Taxable income (loss) (11,769) (23,088) (605) 29,508 (32,739)
Federal tax liabilitynone none none 4,429 none
OPINION
I. Profit Motive
This is another case of taxpayers claiming that they may
deduct losses from a horse activity because they allegedly
entered into the activity for profit. Section 183(a) generally
limits the amount of expenses that may be deducted with respect
to an activity "not engaged in for profit". Whether an
individual conducts an activity for profit rests on whether he or
she engages in the activity with the primary purpose of reaping a
profit. Wolf v. Commissioner, 4 F.3d 709, 713 (9th Cir. 1993),
affg. T.C. Memo. 1991-212; see also Warden v. Commissioner, T.C.
Memo. 1995-176, affd. without published opinion 111 F.3d 139 (9th
Cir. 1997). Whether petitioners engaged in their horse activity
with the requisite profit objective must be determined from the
facts and circumstances of the case. Golanty v. Commissioner,
72 T.C. 411, 426 (1979), affd. without published opinion 647 F.2d
170 (9th Cir. 1981); sec. 1.183-2(a) and (b), Income Tax Regs.
Petitioners bear the burden of proof, Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933), and more weight is given to
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