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1922). The elements of personal pleasure are only one factor to
be considered in determining whether the activity is engaged in
for profit. See sec. 1.183-2(b)(9), Income Tax Regs.
In this case, petitioners derived pleasure from their horse
activity and were attached to their horses. That attachment may
explain why petitioners devoted so little effort to culling their
herd, improving the quality of their horses, and reducing their
operating expenses prior to 1994.
This factor favors respondent’s position.
C. Conclusion
On balance, we conclude that petitioners’ horse activity
during the years at issue was an activity not engaged in for
profit within the meaning of section 183(c). In reaching our
decision, we have considered the factors listed in section 1.183-
2(b), Income Tax Regs., all contentions presented by the parties,
and the unique facts and circumstances of this case.
Petitioners engaged in their horse activity for at least 11
years, losing more than $500,000 on a cumulative basis.
Petitioners did not generate a profit or even come close during
any of the years at issue. Although petitioners were dedicated
to their horses, the totality of the objective facts and
circumstances does not support petitioners’ assertion that their
horse activity was engaged in for profit. Petitioners did not
prepare for the economic realities of the business, and they did
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