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Petitioners contend that this factor favors them because
they were like the taxpayer in Shane v. Commissioner, supra,
where we found that the taxpayer had a profit objective. We
disagree. Petitioners have not shown that they had any chance to
make a profit or even to recoup their losses.
This factor favors respondent.
8. Financial Status of the Taxpayer
Substantial income from sources other than the activity,
especially if the losses generate substantial tax benefits, may
indicate that the taxpayer is not conducting the activity for
profit. Sec. 1.183-2(b)(8), Income Tax Regs.
Petitioners contend that they did not have a large amount of
income. We disagree. Mr. Lundquist received total wage income
of $254,874 from Delta Airlines during the years in issue.
Petitioners' income from interest and IRA and pension
distributions totaled $285,800 for the years in issue. See
Rinehart v. Commissioner, T.C. Memo. 1998-205 (taxpayers lacked
profit objective where taxpayer earned between $166,000 and
$170,000 per year during the years in issue).
Petitioners contend that they had limited financial means
and point out that petitioner bought the three horses with money
petitioners raised by mortgaging property. Petitioners had ample
income, and they did not show that they had to mortgage property
to finance the horse activity.
This factor favors respondent.
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