Michael G. Bunney - Page 14

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               Petitioner had no records of bills or invoices for any                 
          expenses he incurred on behalf of M&S.  Petitioner provided a               
          list of expenses that was prepared using the Quicken software               
          program.  The expense report was prepared and printed solely for            
               Petitioner did not maintain records for the purpose of                 
          decreasing expenses or increasing profits.  Almost all of                   
          petitioner’s evidence regarding his record keeping was printed              
          from his computer in preparation for trial.  Petitioner provided            
          no credible evidence of conducting a business of horse breeding,            
          and there is no reliable evidence that he was breeding any horses           
          after selling Bandits Lucky Doc.                                            
               A taxpayer’s history of income or loss with respect to an              
          activity may indicate the presence or absence of a profit                   
          objective.  See Golanty v. Commissioner, 72 T.C. at 426; Kuberski           
          v. Commissioner, T.C. Memo. 2002-200; sec. 1.183-2(b)(6), Income            
          Tax Regs.  The magnitude of the activity’s losses in comparison             
          with its revenues may be an indication that the taxpayer did not            
          have a profit objective.  McKeever v. Commissioner, T.C. Memo.              
          2000-288.  A continuous series of losses during the startup stage           
          will not necessarily be deemed indicative that the activity was             
          not engaged in for profit.  Sec. 1.183-2(b)(6), Income Tax Regs.            
          The cumulative loss, however, should not be of such a magnitude             
          that an overall profit on the entire operation could not possibly           

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