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both had success in their careers and in their investments, and
that the losses claimed from the horse-breeding activity, if
allowed, would provide them with significant tax benefits,
reducing the after-tax cost of carrying on this money-losing
activity.
The final factor is whether petitioners derived pleasure or
recreation from the activity. Sec. 1.183-2(b)(9), Income Tax
Regs. Petitioners argue that the horse-breeding activity
required a lot of difficult work, including cleaning and brushing
the horses, trimming their hooves, mucking out their stalls and
corral, watering and feeding the horses, hauling hay and feed,
spreading manure on the pasture, branding, burning brush,
cleaning irrigation ditches, and so forth. Petitioners state:
“The Petitioners fail to see how backbreaking activity of this
nature, in addition to full-time employment, can be considered
pleasurable”, a proposition for which they might have cited and
quoted Doyle v Commissioner, T.C. Memo. 1982-694 (“They did
virtually all the hard work themselves in the interest of saving
money. They maintained the horses, mucked out the stalls, drove
to the shows, cultivated the alfalfa field, and dug their own
well. Activities of this nature are difficult to call
pleasurable.”).
We have arrived at the contrary conclusion in a multitude of
cases. In Novak v. Commissioner, T.C. Memo. 2000-234, we
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