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avocational interest in Hereford breeding, as evidenced by his
attendance, and occasional showing of animals, at livestock
conventions and fairs, we believe any recreational component of
these activities was minor. Cf. Sullivan v. Commissioner, T.C.
Memo. 1998-367 (taxpayer’s regular participation as
nonprofessional rider in cutting horse competitions constitutes
recreation indicative of lack of profit motive), affd. without
published opinion 202 F.3d 264 (5th Cir. 1999). Because
petitioners’ cattle activity lacked significant recreational
appeal, a profit intent is indicated under section 1.183-2(b)(9),
Income Tax Regs.
C. Conclusion
Petitioners’ purebred Hereford herd grew significantly
during the first 6 years of Maple Row’s operation, the years at
issue herein. Their herd inventory records document this herd
building process. While losses were incurred in all 6 years,
such losses are consistent with a startup period inherent in herd
building and therefore do not necessarily indicate a lack of
profit motive. Given the growth in petitioners’ herd as of 1995,
the demonstrated market value of purebred Hereford bulls, their
record keeping practices, and the absence of significant
recreational elements in cattle raising, we are persuaded that
petitioners had an actual and honest intent to profit from their
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