- 20 - 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 indicatePage: 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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