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changes were attempted in order to improve profitability. Sec.
1.183-2(b)(1), Income Tax Regs.
Petitioners maintained a record of the income and expenses
related to their horse breeding activity, but they did not
provide evidence of a breakdown or break-even analysis of their
overall horse breeding activity. Although petitioners created a
business plan for their horse breeding activity, it appears that
they did not make decisions in accordance with the business
plans, projections, or analyses of the costs required to carry on
the activity in a profitable manner. It seems unhelpful for
petitioners to create and rely on a “revised” business plan based
on earlier projections rather than actual expenses. Such
reliance on projections that have no semblance to reality or to
historical income and expense information is foolish. Although
there is some indication that petitioners carried on the horse
breeding activity as a separate business, we do not think that
petitioners carried on their activity in a businesslike manner.
Petitioners’ NSA records were unretrievable due to a change
and upgrade of software. As such, we are not able to review
these purported records.
This factor favors respondent’s position.
(2) The Expertise of The Taxpayer or Their Advisers.
A taxpayer’s expertise, research, and study of an activity,
as well as his or her consultation with experts, may be
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