Otis W. Jordan and Alma F. Jordan - Page 8

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          factor analysis in those situations where it is helpful to do so.           
          See, e.g., Phillips v. Commissioner, T.C. Memo. 1997-128.  In               
          this case, we consider the burden of discussing each of the above           
          factors to outweigh the benefits of doing so.  No one factor is             
          determinative, see sec. 1.183-2(b), Income Tax Regs., some                  
          factors are not applicable, and those that are provide little               
          guidance when considered separately.  For example, respondent’s             
          position is strongly supported by the history of annual losses              
          suffered by petitioners since they began their horse racing                 
          activity.  A consistent pattern of losses suggests the lack of a            
          profit motive.  See Golanty v. Commissioner, supra; sec. 1.183-             
          2(b)(6), Income Tax Regs.  On the other hand, given the nature of           
          the activity involved, it is not improbable that petitioners’               
          cumulative loss could be recouped on the back of a single                   
          successful foal.  Many of the foals sired by Two Punch (the                 
          stallion to which one of petitioners’ broodmares was mated)                 
          successfully competed as thoroughbreds.  As noted in the                    
          applicable regulation, “an opportunity to earn a substantial                
          ultimate profit in a highly speculative venture is ordinarily               
          sufficient to indicate that the activity is engaged in for profit           
          even though losses or only occasional small profits are actually            
          generated.”  Sec. 1.183-2(b)(7), Income Tax Regs.  We consider              
          petitioners’ horse racing activity to be a highly speculative               

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