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Finally, we note that none of the changes made by
petitioners, ostensibly to reduce losses, control costs, and
foster profitability, had any material effect. The amount of
petitioners’ losses did not decline following the move to the
ranch, despite petitioners’ claims that the move enabled them to
perform ranch work and otherwise minimize expenses. The emphasis
on new bloodlines did not result in any significant reduction in
net losses.
Under the facts and circumstances of this case, “the
trappings of a business” that exist are insufficient to
demonstrate that petitioners’ horse activity was carried on in a
businesslike manner for profit. See Golanty v. Commissioner, 72
T.C. at 430. On balance, we conclude that petitioners did not
operate their horse activity in a businesslike manner.
This factor favors respondent’s position.
2. The Expertise of Petitioners or Their Advisers
Preparation for an activity by extensive study of its
accepted business, economic, and scientific practices, or
consultation with industry experts, may indicate a profit motive
where the taxpayer carries on the activity in accordance with
such practices. See sec. 1.183-2(b)(2), Income Tax Regs.
Petitioners argue that Mrs. McKeever’s background as a lifelong
horsewoman provided sufficient expertise to indicate a profit
motive. We disagree. We do not intend to denigrate Mrs.
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