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satisfaction from his work; however, where the possibility for
profit is small (given all the other factors) and the possibility
for gratification is substantial, it is clear that the latter
possibility constitutes the primary motivation for the activity.”
Burger v. Commissioner, supra.
Because petitioners derived substantial personal pleasure
from their horse breeding activity, including showing their
horses, this factor favors respondent.
L. Conclusion
Considering all the facts and circumstances, we find that
petitioners’ horse breeding activity was not engaged in for
profit within the meaning of section 183(c). In reaching our
decision, we have considered the factors listed in section 1.183-
2(b), Income Tax Regs., all arguments presented by the parties,
and the unique facts of this case.
Petitioners engaged in their horse breeding activity for at
least 22 years, with a net loss of at least $217,356 during 1992
through 1998. Petitioners did not generate a profit or even come
close to doing so during any of the years in issue. We do not
question petitioners’ dedication to their horses. But, based
upon the totality of the circumstances and the objective facts,
petitioners’ arguments are unsupportable that their horse
activity was engaged in for profit. Petitioners did not prepare
for the economic realities of the horse breeding business as
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