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gelding named Defy for $1,100. The stated purpose for purchasing
Defy was for resale.
Petitioner believed that Bandit, a 3-year old during 1998,
had the potential to be a very successful stud horse. He had won
the title of Reserve Champion of the California Futurity, a
Statewide ranking. Petitioner intends to exploit Bandit first as
a show horse and then to earn income from his stud service.
Petitioner began with a single horse in 1989, and by 1998
she had 10 horses and 1 that she expected to be a profitable
champion. Petitioner set annual goals that were not achieved,
but she would analyze her situation when resetting goals.
Although capable of personally doing so, petitioner always
hired professionals to show her horses to achieve the best
results and maximum exposure for her animals. Petitioner made
efforts to advertise her animals at shows, in magazines, and
within various associations. Petitioner did not prepare any
profit projections prior to commencing the horse activity.
Petitioner does not keep all of her horses on her property, and
some are kept on an acquaintance’s property near Julian,
California. Petitioner maintains a trailer on the Julian
property to reside in when she is tending the horses there.
For the years 1989 through 1995, petitioner reported income
and expenses and claimed losses from her horse activity as
follows:
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