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profitable. At a time not specified in the record, Roberts
advised Mrs. Berry to cut her farm expenses, improve her
marketing, concentrate on Tennessee walking horses, and increase
and improve her broodmare bloodlines. There is no evidence that
Mrs. Berry followed his advice, except to buy four broodmares
with better bloodlines in 1998. Petitioners did not adequately
seek and follow advice relating to the economic aspects of their
horse activity. See Burger v. Commissioner, 809 F.2d 355, 359
(7th Cir. 1987), affg. T.C. Memo. 1985-523; Glenn v.
Commissioner, T.C. Memo. 1995-399, affd. without published
opinion 103 F.3d 129 (6th Cir. 1996); see also Golanty v.
Commissioner, 72 T.C. at 432. This factor favors respondent.
3. Taxpayer's Time and Effort
The fact that a taxpayer devotes much time and effort to
conducting an activity may indicate that he or she has a profit
objective. See sec. 1.183-2(b)(3), Income Tax Regs. Mrs. Berry
spent long hours on the activity beginning in February 1995.
This factor favors petitioners.
4. Expectation That Property Used in the Activity Would
Appreciate in Value
A taxpayer may intend to make an overall profit when
appreciation in the value of assets used in the activity is
realized. See Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965),
affd. 379 F.2d 252 (2d Cir. 1967); sec. 1.183-2(b)(4), Income Tax
Regs. There is an overall profit if net earnings and appreciation
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