Harvey J. Davis and Patricia A. Davis - Page 16

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          (D.C. Cir. 1983).  In deciding whether petitioners operated their           
          show horse activity for profit, we apply the following nine                 
          nonexclusive factors:  (1) The manner in which the taxpayer                 
          carried on the activity; (2) the expertise of the taxpayer or his           
          or her advisers; (3) the time and effort expended by the taxpayer           
          in carrying on the activity; (4) the expectation that the assets            
          used in the activity may appreciate in value; (5) the success of            
          the taxpayer in carrying on other similar or dissimilar                     
          activities; (6) the taxpayer's history of income or loss with               
          respect to the activity; (7) the amount of occasional profits, if           
          any, which are earned; (8) the financial status of the taxpayer;            
          and (9) whether elements of personal pleasure or recreation are             
          involved.  See sec. 1.183-2(b), Income Tax Regs.  No single                 
          factor controls.  See Osteen v. Commissioner, supra; Brannen v.             
          Commissioner, 722 F.2d 695, 704 (11th Cir. 1984), affg. 78 T.C.             
          471 (1982); sec. 1.183-2(b), Income Tax Regs.  Petitioners have             
          the burden of proof.  See Golanty v. Commissioner, 72 T.C. 411,             
          426 (1979), affd. without published opinion 647 F.2d 170 (9th               
          Cir. 1981).                                                                 
               Petitioners called two expert witnesses.  O’Connor appraised           
          petitioners’ horses.  James Truitt (Truitt) appraised                       
          petitioners’ property, including their residence and farm                   
          improvements.  As discussed below, petitioners have proven that             
          the appreciation in their horses and farm improvements was                  

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