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their breeding stock was mature and in its prime during the
taxable years in issue. Petitioners offered no evidence to
justify their long history of sustained losses.
Our words in Golanty v. Commissioner, 72 T.C. at 427
(quoting Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965),
affd. 379 F.3d 252 (2d Cir. 1967)), apply to the case at hand as
well:
The petitioner has learned a good deal about the
breeding of horses, and she has devoted energy and time
to the activity. Nevertheless, when we strip away all
the talk, dig out the hard facts, and apply cold logic
to them, we are convinced that the petitioner did not
truly expect to make a profit from her horse-breeding
venture, and that such activity was not potentially
profitable and could not "recoup the losses which have
meanwhile been sustained in the intervening years."
The seventh factor is the amount of occasional profits
earned from the activity. A substantial profit, though only
occasional, would generally indicate that an activity is engaged
in for profit. Sec. 1.183-2(b)(7), Income Tax Regs. Petitioners
earned no profits of any size at any time from their horse-
breeding activity.
The eighth factor is the financial status of the taxpayer.
Substantial income from other sources, particularly when the
losses from the activity generate tax benefits, may indicate that
the activity is not engaged in for profit, especially when
personal or recreational aspects are present. Sec. 1.183-
2(b)(8), Income Tax Regs. Petitioners’ tax returns indicate that
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