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sought no professional advice on the economic aspects of the
breeding, training, and showing of Arabian horses.
Petitioner is an intelligent person, and he has acquired a
good deal of knowledge about Arabian horses and their breeding.
However, such activity and knowledge are altogether consistent
with his interest in a hobby, and he has failed to show that he
sought or acquired the expertise that would enable him to turn
the activity into a profitable business.
(3) The Time and Effort Expended by the Taxpayer in Carrying on
the Activity.
Petitioner argues that he has organized his medical practice
and his farm so that he can spend enough time to develop his
Arabian horse activity. Petitioner devoted substantial time to
his medical practice. The time and effort spent breeding horses
was substantially less and was not inconsistent with the time one
might expect to be devoted to a hobby from which the participant
receives enjoyment and satisfaction.
(4) Expectation That Assets Used in Activity May Appreciate in
Value.
Petitioner argues that he expects the assets used in his
activity will appreciate in value. Petitioner did not estimate
the value of his horses, and no expert testimony or other
reliable evidence of value was introduced. Based on petitioner’s
reported sales of Arabian horses to date, he does not come close
to covering his losses.
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