Louis A. Filios and Estate of Emma L. Filios, Deceased, Louis A. Filios, Executor - Page 16

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               2.   The Expertise of the Taxpayers or Their Advisers                   
               Efforts to gain experience and a willingness to follow                  
          expert advice are considered in deciding if a taxpayer has a                 
          profit objective.  Sec. 1.183-2(b)(2), Income Tax Regs.                      
          Preparation for an activity by extensive study of its practices              
          or by consultation with experts may indicate that a taxpayer has             
          a profit motive if the taxpayer follows that advice.  Sec.                   
          1.183-2(b)(2), Income Tax Regs.                                              
               Petitioners contend that petitioner's self-education and                
          reliance on others show that he had a profit objective.  We                  
          disagree.  Petitioners did not show that petitioner studied                  
          successful business and economic practices with respect to                   
          breeding and racing horses.  Petitioner used reputable                       
          professional horse trainers.  However, they did not advise                   
          petitioner how to make a profit.  The fact that petitioner did               
          not seek advice on the economic aspects of his activity suggests             
          that he lacked a profit motive.  See Rinehart v. Commissioner,               
          T.C. Memo. 1998-205 (horse activity owner employed horse                     
          professionals but not for business advice).  This factor favors              
               3.   Taxpayer's Time and Effort                                         
               The fact that a taxpayer devotes much time and effort to                
          conducting an activity may indicate that he or she has a profit              
          objective.  Sec. 1.183-2(b)(3), Income Tax Regs.  Petitioner                 
          spent 10 to 20 hours a week on his activity.  He did not show                
          that a profitable horse activity could be successfully operated              

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