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II. OPINION
A. Background
The issue for decision is whether petitioner operated her
horse breeding activity for profit in 1988, 1989, and 1990.
An activity is conducted for profit if it is conducted with
an actual and honest profit objective. Osteen v. Commissioner,
62 F.3d 356, 358 (11th Cir. 1995), affg. in part and revg. on
other issues T.C. Memo. 1993-519; Surloff v. Commissioner, 81
T.C. 210, 233 (1983); Dreicer v. Commissioner, 78 T.C. 642, 645
(1982), affd. without opinion 702 F.2d 1205 (D.C. Cir. 1983). In
deciding whether petitioner operated her horse racing and
breeding activity for profit, we apply the nine factors listed in
section 1.183-2(b), Income Tax Regs. The factors are: (1) The
manner in which the taxpayer carried on the activity; (2) the
expertise of the taxpayer or his or her advisers; (3) the time
and effort expended by the taxpayer in carrying on the activity;
(4) the expectation that the assets used in the activity may
appreciate in value; (5) the success of the taxpayer in carrying
on other similar or dissimilar activities; (6) the taxpayer's
history of income or loss with respect to the activity; (7) the
amount of occasional profits, if any, which are earned; (8) the
financial status of the taxpayer; and (9) whether elements of
personal pleasure or recreation are involved. No single factor
controls. Osteen v. Commissioner, supra; Brannen v.
Commissioner, 722 F.2d 695, 704 (11th Cir. 1984), affg. 78 T.C.
471 (1982); sec. 1.183-2(b), Income Tax Regs. Petitioners have
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