Roderick P. Strickland and Linda G. Strickland - Page 20




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          profit objective.  See sec. 1.183-2(b)(5), Income Tax Regs.                 
               Petitioners have been successful in other activities, but              
          none that are similar to their horse activity.  This factor is              
          neutral.                                                                    
               6.   Taxpayer's History of Income or Losses                            
               A history of substantial losses may indicate that the                  
          taxpayer did not conduct the activity for profit.  See Golanty v.           
          Commissioner, 72 T.C. at 427; sec. 1.183-2(b)(6), Income Tax                
          Regs.  Losses during the initial stage of an activity do not                
          necessarily indicate that it is not conducted for profit.  See              
          Engdahl v. Commissioner, 72 T.C. at 669; sec. 1.183-2(b)(6),                
          Income Tax Regs.  The startup phase of a horse-breeding activity            
          may be 5 to 10 years for standardbred horses.  See Engdahl v.               
          Commissioner, supra.  This factor is neutral because petitioners            
          were in the third and fourth year of their activity in 1995 and             
          1996.                                                                       
               7.   Amount of Occasional Profits, If Any                              
               The amount of any occasional profits the taxpayer earned               
          from the activity may show that the taxpayer had a profit motive.           
          See sec. 1.183-2(b)(7), Income Tax Regs.  Petitioners did not               
          have a profit from 1993 to 1996.  However, this is not                      
          unreasonable during the startup years of petitioners’ activity.             
               Losses sustained because of unforeseen or fortuitous                   
          circumstances beyond the control of the taxpayer do not indicate            






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