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if the activity does not have substantial recreational aspects,
may indicate a profit motive. See sec. 1.183-2(b)(3), Income Tax
Regs. Petitioner devoted about 20 to 25 hours per week to the
horses, in addition to the amount of time Mr. Pitts spent feeding
and watering the horses. It is not clear from the record how
much time Mr. Pitts spent on the horse activity. Petitioner did
all of the cleaning, breeding, and heavy work that Mr. Pitts
could not do. Petitioner would consult the breeding charts and
keep an eye on the mares to determine when they were in heat.
This factor favors petitioners.
4. Expectation That Assets Will Appreciate in Value
An expectation that assets used in that activity will
appreciate in value may indicate a profit objective. See sec.
1.183-2(b)(4), Income Tax Regs. Petitioner testified that she
expected to get champions out of Ding Dong Daddy and Halyard
since they came from good bloodlines. In fact, one of Ding Dong
Daddy’s offspring was a successful racing horse. However, there
is nothing in the record that shows costs of petitioners’ horses
or fluctuations in their value.
5. Petitioners’ Success in Similar or Dissimilar Activities
The fact that the taxpayer has engaged in similar activities
in the past and converted them from unprofitable to profitable
enterprises may indicate that he or she is engaged in the present
activity for profit, even though the activity is presently
unprofitable. See sec. 1.183-2(b)(5), Income Tax Regs. There is
no evidence that petitioners had been involved in other profit-
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