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investigate the acquisition of or operate the horse activity in
the same way he ran his other profitable businesses.
We disagree that petitioners did not conduct their horse
activity in a businesslike manner. Petitioner had a specific
concept clearly in mind and pursued it consistently. He had a
business plan in 1990 for petitioners’ horse activity, and he
generally followed that plan. Petitioners’ plan appropriately
considered the costs of operating the activity. Although
petitioners’ business plan did not include a detailed written
budget, petitioners’ plan is evidenced by their actions. See
Phillips v. Commissioner, T.C. Memo. 1997-128 (taxpayers engaged
in Arabian horse breeding activity for profit; their actions
constituted a business plan despite the fact that they had no
financial plan or written budget). Petitioners consulted with
and relied on a well-known expert, built a barn, stable, and
arena, registered with the Arabian Registry as breeders, and
filmed their horses’ performances at horse shows to critique the
performance.
Petitioners kept complete financial books and records of
their horse activity. Petitioners also kept detailed records on
the horses and their training to monitor their successes and
failures. We think the differences in books and records between
the horse activity and their other businesses are understandable
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