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(3) The Time And Effort Expended by The Taxpayer in
Carrying on The Activity.
The devotion of a great deal of personal time and effort by
the taxpayer in carrying on an activity may indicate that it is
engaged in for profit, particularly if there are no substantial
personal or recreational elements associated with such activity.
Sec. 1.183-2(b)(3), Income Tax Regs.
Mr. Reimer was employed full-time during 1994 and 1995.
Mrs. Reimer was also employed full-time as a preschool teacher
during the years in issue. Mrs. Reimer worked on the horse
breeding activity before and after school during the week and for
3 to 6 hours on Saturday and Sunday. Mr. Reimer worked on the
administrative aspects of the horse breeding activity about 10 to
15 hours each week.
Although the time and effort expended by petitioners on
their horse breeding activity support a contention of profit
objective, we discern that petitioners derived substantial
recreational benefit from the time they spent with their horses
and with the community of “horse people”.
This factor is neutral.
(4) Expectation That Assets Used in The Activity May
Appreciate in Value.
An expectation that the appreciation in the value of the
assets used in the activity will produce a profit when netted
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