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thoroughbred horse activities for 14 years and has many other
clients who raise horses as well.
We place little weight on respondent’s argument that
petitioner lacks the requisite expertise because neither she nor
her advisers are experts in the economics of thoroughbred horses.
Petitioner does not need advanced training in economics to know
that a thoroughbred horse that wins races is more valuable than
one that does not. Petitioner’s advisers have demonstrated an
expertise in breeding and training winning thoroughbreds, and she
has demonstrated a willingness to solicit and follow their
advice.
3. The Time and Effort Expended by the Taxpayer in
Carrying On the Activity
We next consider the time and effort petitioner expended in
carrying on her thoroughbred horse breeding and racing
activities. A taxpayer’s devotion of much time and effort to
conducting an activity, particularly if the activity does not
involve recreational aspects, may indicate that he or she has a
profit objective. Sec. 1.183-2(b)(3), Income Tax Regs.
Petitioner claims to have spent 10 to 20 hours per week on
bookkeeping alone. In addition, she claims that she spent time
reading industry-related publications as well as time talking to
her breeding and training managers. Respondent counters that
petitioner overstated the amount of time and points out that,
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