- 27 -
v. Commissioner, supra at 669; Phillips v. Commissioner, T.C.
Memo. 1997-128; Briggs v. Commissioner, T.C. Memo. 1994-125;
Leonard v. Commissioner, T.C. Memo. 1993-472; sec. 1.183-2(b)(6),
Income Tax Regs. Petitioners contend that their losses in the
years in issue were caused by unforeseen circumstances, such as
Temptation's injury, the death of a foal, Labrette's bowed
tendon, and lack of customers. Petitioners point out that
Emerson said that Temptation would have been profitable if he had
not been injured.
Temptation never performed at better than the intermediate
dressage level. We do not know if Temptation would have reached
the highest levels of dressage, or if petitioner's activity would
have been profitable if Temptation had not been injured. It is
also unknown if petitioner's activity would have been profitable
if Labrette's foal by Temptation had not been injured in 1983.
See Burger v. Commissioner, 809 F.2d 355 (7th Cir. 1987), affg.
T.C. Memo. 1985-523 (taxpayer did not show that activity would
have been profitable if the unforeseen circumstance had not
occurred). These injuries occurred at least 5 years before the
first year in issue.
Petitioner did not campaign Labrette until 1990, the last
year in issue. Labrette bowed a tendon after the years in issue.
Thus, that injury did not affect the years in issue.
A small chance to make a large profit may indicate that a
taxpayer has a profit objective even if he or she has large
continuous losses. Sec. 1.183-2(b)(7), Income Tax Regs.
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