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he did not abandon unprofitable methods. He offered no evidence
of how comparable profitable businesses worked.
Petitioners contend that petitioner operated his horse
racing and breeding activity for profit because he operated
Westfield Gage and his horse activity in the same manner. We
disagree. Petitioner did not operate Westfield Gage and his
horse activity in the same manner. He said that if Westfield
Gage had lost money, he would have gotten advice on how to fix
it. When Westfield Gage began to lose money because Pratt and
Whitney asked him to lower his charges to them, petitioner
convinced Pratt and Whitney to give Westfield Gage additional
business so that it could again be profitable. Petitioner took
no similar action to try to make his horse activity profitable.
Petitioners contend that petitioner operated his horse
racing and breeding activity like the taxpayer did in Arwood v.
Commissioner, T.C. Memo. 1993-352. We disagree. The taxpayer in
Arwood v. Commissioner, supra, had losses from 1981 to 1987.
However, he had a written business plan which he adjusted in
response to changed circumstances, and he consulted and relied on
experts for business and financial advice. He believed that his
horses would be profitable because his horse's half-brother
received $10,000 per breeding and the sire of his horse received
$40,000 per breeding. Petitioner did not have a written plan or
financial analysis of the profit potential of his activity.
This factor favors respondent.
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