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factors are: (1) The manner in which the taxpayer carries on the
activity; (2) the expertise of the taxpayer or his advisers;
(3) the time and effort expended by the taxpayer in carrying on
the activity; (4) the expectation that assets used in the
activity may appreciate in value; (5) the success of the taxpayer
in carrying on other similar or dissimilar activities; (6) the
taxpayer's history of income or loss with respect to the
activity; (7) the amount of occasional profits, if any, that are
earned; (8) the financial status of the taxpayer; and
(9) elements of personal pleasure or recreation. These factors
are not intended to be exclusive, and no one factor or majority
of the factors need be considered determinative. Golanty v.
Commissioner, supra at 426-427; sec. 1.183-2(b), Income Tax Regs.
In this case, the predominant factors weighing against petitioner
are whether petitioner carried on the activity in a businesslike
manner, petitioner’s history of losses, and the elements of
personal pleasure involved. None of the other factors supports
his position.
Petitioner argues that he conducted his horse activity in a
businesslike manner. Maintaining complete and accurate books and
records, conducting the activity in a manner substantially
similar to comparable businesses that are profitable, and making
changes in operations to adopt new techniques or abandon
unprofitable methods are factors that may indicate that a
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Last modified: May 25, 2011