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2. The Expertise of the Taxpayers or Their Advisers
Efforts to gain experience and a willingness to follow
expert advice are considered in deciding if a taxpayer has a
profit objective. Sec. 1.183-2(b)(2), Income Tax Regs.
Petitioner studied breeding and competition and learned much
about horses and breeding techniques. She learned to deliver
foals on her own and learned about artificial breeding
techniques. However, she erroneously thought Temptation was from
Switzerland when she bought him, and her costs to quarantine her
horses for more than 3 days would not have been unexpected if she
had known the quarantine rules.
Petitioner did not seriously study the business of breeding
and selling horses or show how her skills would lead to the
financial success of her horse activity. Petitioner's horse
trainers and riders apparently advised her on horse buying,
training, and showing, not on how to make a profit. These facts
suggest that petitioner lacked a profit motive. See Rinehart v.
Commissioner, supra (horse activity owner employed horse
professionals but not for business advice).
This factor favors respondent.
3. Taxpayer's Time and Effort
The fact that a taxpayer devotes much time and effort to
conducting an activity may indicate that he or she has a profit
objective. Sec. 1.183-2(b)(3), Income Tax Regs.
Petitioner usually spent long hours working with her horses.
On balance, this factor favors petitioners.
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