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would result in a sufficient amount of profit to overcome
petitioner's losses. We note that petitioner, at the time of
trial, was offering one of her stallion's stud service for $900,
but she made no showing of an existing or potential income flow
or means to achieve a profit.
Petitioner did not maintain a separate checking account or
prepare financial statements for her horse activity, but she did
maintain detailed records of the breeding, maintenance, and
health status of each horse. In addition, each check issued for
horse-related activity was marked or referenced for that purpose
and maintained and segregated on a monthly basis. Petitioner was
able to substantiate her horse activity expenditures, and the
only question before the Court is whether petitioner’s horse
activity was a for-profit activity.
Although we can accept the precept that horse breeding
necessarily includes a startup period, petitioner provided no
explanation as to why she was not able to earn some income or cut
losses for such an extended period of time. Petitioner generally
worked toward the goal of someday making a profit, but based on
the record she did not attempt in earnest to achieve that goal
prior to or during the years in issue. From 1989 through the
time when petitioner believed she had produced a stallion with
championship potential (1995), petitioner had claimed $132,253 in
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