Sheila Mae Howard - Page 13

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          opinion 647 F.2d 170 (9th Cir. 1981).                                       
               Based on all of the facts and circumstances in the present             
          case, we hold that petitioner has failed to prove that she                  
          engaged in the horse breeding activity for profit within the                
          meaning of section 183.  See Rule 142(a); INDOPCO, Inc. v.                  
          Commissioner, supra; Welch v. Helvering, supra.                             
               We do not analyze in depth all nine of the factors                     
          enumerated in the regulation but rather focus on some of the more           
          important ones that inform our decision.                                    
               The fact that a taxpayer carries on the activity in a                  
          businesslike manner and maintains complete and accurate books and           
          records may indicate a profit objective.  Sec. 1.183-2(b)(1),               
          Income Tax Regs.  However, petitioner failed to develop a budget            
          or a formal or informal business plan to determine whether the              
          horse breeding activity could be operated profitably.  Other than           
          canceled checks and a few receipts, petitioner also failed to               
          keep any books and records with respect to the horse breeding               
          activity.  Petitioner did not keep the type of records that could           
          be used to increase the profitability of a business.  Petitioner            
          never prepared budgets or market projections that would outline             
          strategies for ensuring a profitable business venture and making            
          informed business decisions on a periodic basis.  Such lack of              
          information upon which to make educated business decisions tends            
          to belie a taxpayer’s contentions that an activity was pursued              

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