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indicative of a profit objective. Sec. 1.183-2(b)(2), Income Tax
Regs.
The fact that Mrs. Reimer had experience in raising or
maintaining horses prior to entering into the horse breeding
activity does not alone show that the horse activity was engaged
in with a profit objective. See Glenn v. Commissioner, T.C. Memo
1995-399, affd. without published opinion 103 F.3d 129 (6th Cir.
1996). At the time they started the activity, petitioners owned
J-Mar Elbravado, which introduced them to the business of Arabian
horse breeding. Petitioners also sought general advice from
other breeders, trainers, and an accountant. However, there is
no evidence that they reviewed the records of other breeding
operations or sought specific advice as to how to make their
operation profitable. Similar to the taxpayers in Burger v.
Commissioner, T.C. Memo. 1985-523, affd. 809 F.2d 355, 359 (7th
Cir. 1987), petitioners could not point to any evidence that
demonstrated how they planned to reduce their losses. (“The
taxpayers’ failure to consult economic experts or develop an
economic expertise themselves is another fact that indicates a
lack of profit motive”.) Nor could petitioners show how they
monitored expenses or losses to enable them to make informed
business decisions as to how to make their activity profitable.
This factor favors respondent’s position.
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