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substituted for “3” and “7” for “5”. Petitioner has never
reported a profit from his horse activity.
Section 1.183-2(b), Income Tax Regs., sets forth some
relevant factors for determining whether an activity is engaged
in for profit. The relevant factors are: (1) The manner in
which the taxpayer carries on the activity; (2) the expertise of
the taxpayer or his advisers; (3) the time and effort expended by
the taxpayer in carrying on the activity; (4) the expectation
that assets used in the activity may appreciate in value; (5) the
success of the taxpayer in carrying on other similar or
dissimilar activities; (6) the taxpayer’s history of income or
losses with respect to the activity; (7) the amount of occasional
profits, if any, which are earned; (8) the financial status of
the taxpayer; and (9) the presence of elements of personal
pleasure or recreation. Not all of these factors are applicable
in every case, and no one factor is controlling. See sec. 1.183-
2(b), Income Tax Regs.
We now apply each of these factors to the facts in this
case.
(1) Manner in Which the Taxpayer Carries on the Activity
Petitioner argues that his actions evidenced a business plan
and cites Phillips v. Commissioner, T.C. Memo. 1997-128. In
Phillips, the taxpayers had a business plan. They calculated the
costs per horse, per month. They estimated when their horse
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