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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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