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used in the horse activity” is likewise warranted. Petitioner’s
experiences in the high-tech arena simply did not translate
meaningfully into his cattle-ranching operations.
6. The taxpayer’s history of income or losses with respect to the
activity.
According to section 1.183-2(b)(6), Income Tax Regs., losses
that “continue to be sustained beyond the period which
customarily is necessary to bring the operation to profitable
status” may be indicative of a lack of profit objective.
Exceptions exist for losses due to “customary business risks or
reverses” and “unforeseen or fortuitous circumstances which are
beyond the control of the taxpayer”. Id. Here, it is undisputed
that petitioner’s ranch has never generated a profit in the 8
years from their first land purchase in 1990 through 1997.
Losses were incurred in each of the years at issue. Moreover,
the profit petitioners claim for 1998 is attributable to a
$33,000 consulting fee paid to petitioner by a neighbor for help
in planning and building a ranch. The cattle operations
themselves continued to show a loss even in 1998.
Although no evidence was presented as to the customary
startup period for a cattle ranch, 7 or 8 years would seem
excessive. Petitioner, however, asserts that his losses should
nonetheless be excused as attributable to unforeseen
circumstances and casualties. He points to a hurricane damaging
other property held in Hawaii, the calling of a bank loan with
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