- 18 -
Overall, the numerous unbusinesslike practices engaged in by
petitioners provide strong evidence of a lack of profit motive.
Expertise of Petitioners and Their Advisers
Preparation for an activity by extensive study or
consultation with experts may indicate a profit motive where the
taxpayer conducts the activity in accordance with such study or
advice. See sec. 1.183-2(b)(2), Income Tax Regs. The record
demonstrates that Dr. Hillman was involved with horses for 40
years and had become quite knowledgeable in the breeding of
horses. Petitioners have also spent considerable sums to employ
professional trainers for their horses (although as noted some of
the trainers’ time was spent instructing petitioners’ daughter).
Dr. Hillman testified that he consulted with others concerning
the purchase of horses and delegated actual purchasing to them.
However, the mere fact that Dr. Hillman had skill in the
breeding of horses and petitioners hired various experts does not
prove that petitioners engaged in their show horse activity for
profit. See Glenn v. Commissioner, T.C. Memo. 1995-399, affd.
without published opinion 103 F.3d 129 (6th Cir. 1996).
Expertise with respect to the breeding and showing of horses is
to be distinguished from expertise in the economics of these
undertakings. See, e.g., Burger v. Commissioner, 809 F.2d 355,
359 (7th Cir. 1987), affg. T.C. Memo. 1985-523; Sullivan v.
Commissioner, supra; Glenn v. Commissioner, supra; see also
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011