- 17 - for profit), affd. 647 F.2d 170 (9th Cir. 1981). Respondent contends that petitioners’ failure to insure horses they had foaled and horses worth less than $20,000 shows that they lacked a profit objective. Respondent also contends that petitioners’ failure to charge fees for all riding lessons and hauling leased horses shows they lacked a profit objective. We decline to second-guess petitioners on these points. d. Changing Their Operations Boarding horses allowed petitioners to derive income from their facilities before they filled them with their own horses. Respondent concedes that petitioners’ boarding operation is a change contemplated by section 1.183-2(b)(1), Income Tax Regs., but points out that petitioners’ decision to board horses did not prevent losses. However, petitioners’ losses would have been larger if they had not boarded horses. Petitioners also leased horses in 1995 and 1996. e. Conclusion Petitioners operated their horse activity in a serious and organized manner. They considered how best to use their land, the growing interest in horses in their area, and their personal expertise with horses in deciding to start the horse activity. They kept accurate records of their horse activity’s finances and the status of their horses. They improved and expanded their facilities and boarded horses while beginning to acquire qualityPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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