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activity would become profitable. They performed a detailed
analysis of their horse activity. Petitioner did not have such
plans. He has not prepared a profit plan for his horse activity.
He did not prepare any written analysis in order to determine how
he could make a profit or what he would have to do to break even.
Petitioner has not consulted with persons with expertise
regarding the financial aspects of his horse activity.
Petitioner testified that his current goal is to continue his
horse activity but to do so more efficiently. Petitioner
admitted at trial that he will never be able to recoup what he
has spent on his activity thus far.
Some of petitioner’s actions seem to run contrary to a
profit objective. Petitioner testified that the average
commission paid on the sale of a horse is 10 to 15 percent, and
that is what he would pay to persons other than Mr. Dahart.
Petitioner testified that he would pay Mr. Dahart commissions as
high as 50 percent. When petitioner sold La Quintina and Lucy in
Disguise, he paid Mr. Dahart a 50-percent commission on each
sale. When petitioner sold Pro Gato8 for $47,500, he paid Mr.
Dahart a $19,000 or 40-percent commission, and he also paid
8The contract was prepared on Arabian Crossings’ letterhead
that included both the names of petitioner and Alan Dahart.
However, petitioner testified that he and Mr. Dahart did not
jointly own any horses.
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