Louis A. Filios and Estate of Emma L. Filios, Deceased, Louis A. Filios, Executor - Page 18

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               6.   Taxpayer's History of Income or Losses                             
               A history of substantial losses may indicate that the                   
          taxpayer did not conduct the activity for profit.  Golanty v.                
          Commissioner, 72 T.C. at 427; sec. 1.183-2(b)(6), Income Tax                 
          Regs.  A taxpayer may have a profit objective even when the                  
          activity has a history of losses.  Bessenyey v. Commissioner,                
          supra at 274.  Losses during the initial stage of an activity do             
          not necessarily indicate that the activity was not conducted for             
          profit.  Engdahl v. Commissioner, 72 T.C. at 669; sec. 1.183-                
          2(b)(6), Income Tax Regs.  We have said that the startup phase of            
          a horse breeding activity may be 5 to 10 years.  Engdahl v.                  
          Commissioner, supra.                                                         
               Petitioner lost money in each of the 37 years from 1957 to              
          1993.  In those years his income totaled $2,473,951 and his                  
          expenses totaled $9,128,596.  Petitioners contend that we should             
          not give much weight to the fact that petitioner had large losses            
          for a long time because many of his losses were due to unforeseen            
          circumstances.  We disagree.                                                 
               Losses due to unforeseen circumstances do not necessarily               
          indicate that a taxpayer lacked a profit objective.  See Phillips            
          v. Commissioner, T.C. Memo. 1997-128; Briggs v. Commissioner,                
          T.C. Memo. 1994-125; Leonard v. Commissioner, T.C. Memo. 1993-               
          472.  Petitioners contend petitioner would have made a large                 
          profit if he had not lost Luna Rutera as a broodmare.  However,              
          petitioners did not show that petitioner's horse racing and                  
          breeding activity would have been profitable if events beyond                

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