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are enough to recoup losses sustained in prior years. See Bessenyey
v. Commissioner, supra. Petitioners concede that they did not
expect their land or any asset other than their horses to increase
in value but contend that the offspring of the higher quality
broodmares that they bought after 1995 are worth more than those
born in prior years. We disagree. Petitioners offered no evidence
of the value of offspring of higher quality broodmares they bought
after 1995. This factor favors respondent.
5. Taxpayer's Success in Other Activities
The fact that a taxpayer previously engaged in similar
activities and made them profitable may show that the taxpayer has a
profit objective. See sec. 183-2(b)(5), Income Tax Regs. Mrs.
Berry’s work as office manager at her husband’s clinic is not
sufficiently similar to operating a farm and horse activity to
indicate that she could do so successfully. This factor favors
respondent.
6. Taxpayer's History of Income or Losses
A history of substantial losses may indicate that the taxpayer
did not conduct the activity for profit. See Golanty v.
Commissioner, supra at 427; sec. 1.183-2(b)(6), Income Tax Regs. A
taxpayer may have a profit objective even if the activity has a
history of losses, see Bessenyey v. Commissioner, supra at 274,
because losses during the initial stage of an activity do not
necessarily indicate that the activity was not conducted for profit,
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