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horse activity generated some gross income during 1994 through
1997 as a result of culling the herd, the level of petitioners’
operating losses remained relatively steady.
Dr. Cortelezzi testified that the market for paso finos
became depressed in 1992. Petitioners maintain that a depressed
horse market hampered their ability to sell horses. The
depressed market, however, does not explain the absence of sales
in earlier years. Similarly, petitioners’ claim of higher than
average veterinary expense fails to explain their losses. While
petitioners suffered some breeding setbacks and lost horses due
to medical problems, the veterinary expenses were a small
fraction of overall expenses.
Petitioners’ reliance on Mr. Minter also does not explain
their history of losses. We need not decide whether petitioners
received good advice from Mr. Minter. Even if we assume that
petitioners relied on Mr. Minter to their detriment, it is far
from clear that petitioners would have sold horses at a profit if
they had not relied upon his advice. Petitioners ended their
association with Mr. Minter in 1992. As of the date of trial,
petitioners had not made any sales other than the culling sales.
In sum, we do not find any of petitioners’ explanations for their
history of losses adequate to explain the magnitude and duration
of those losses.
This factor favors respondent’s position.
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