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operation was too small for that. It does not appear that Midget
Acres had a separate bank account. We find that petitioners did
not conduct this activity in a businesslike manner.
2. Expertise of Petitioners
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. Petitioner has
a long history with horses. Both petitioners have worked with
horses, and petitioner especially has great knowledge and
experience about bloodlines and with raising, training, showing,
and breeding of various types of horses. Petitioners also spent
quite a few years working for horse farms where they observed
operations. Petitioner often helped out friends and business
associates with the purchase of racing horses. Petitioner
testified that she sought advice from Robert Hundley who was a
trainer as Santa Anita Hollywood Park and a breeder of
thoroughbred horses. However, petitioner did not testify as to
the kind of advice sought nor the nature of the advice received.
While petitioners have excellent credentials for horse
breeding, training, and racing, it is not clear whether they were
experienced or sought advice with regard to the financial aspects
of operating a horse business.
3. Time and Effort Spent in Conducting Activity
The fact that the taxpayer devotes much of his or her
personal time and effort to carrying on an activity, particularly
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