Harvey J. Davis and Patricia A. Davis - Page 20

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          petitioners did not consistently rely on the advice of their                
          expert, McDannald.  Respondent contends that, although                      
          petitioners relied on McDannald to advise them about training,              
          breeding, and showing their horses, their principal adviser and             
          decision maker for buying and selling Arabian horses was Mrs.               
               We disagree.  At trial, petitioner testified that Mrs. Davis           
          made decisions as to acquisitions of property.  We construe this            
          to mean that she made decisions to buy real property, not horses.           
          Petitioners sought and relied on the advice of McDannald, a                 
          nationally known trainer of Arabian horses, about which horses to           
          buy.  For example, McDannald advised petitioners to buy                     
          Splendante in 1993.  McDannald, however, did not advise                     
          petitioners how to make a profit.                                           
               This factor is neutral.                                                
               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.  Petitioners           
          spent a substantial amount of time and effort on their Arabian              
          horse activity.  Respondent concedes that this factor favors                

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