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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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