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274 (1965), affd. 379 F.2d 252 (2d Cir. 1967); sec.
1.183-2(b)(4), Income Tax Regs.
Although petitioner contends she expected the assets to
appreciate in value in light of her actions, petitioner failed to
explain how she expected the sale of her thoroughbred horses and
their offspring to recoup the over $1.1 million in losses she
incurred over 14 years. She never had any of her thoroughbred
horses appraised. In addition, nothing in the record
demonstrates that any of the thoroughbred horses she sold
commanded such a price that she could expect to overcome her
history of losses.
5. The Success of the Taxpayer in Carrying On Other
Similar or Dissimilar Activities
We next examine the success of petitioner in carrying on
other similar or dissimilar activities. If a taxpayer has
previously engaged in similar activities and made them
profitable, this success may show that the taxpayer has a profit
objective, even though the activity is presently unprofitable.
Sec. 1.183-2(b)(5), Income Tax Regs.
Respondent claims that petitioner has never transformed an
unprofitable enterprise into a profitable one. The evidence
shows that petitioner’s only other foray into thoroughbred horse
activities was her second husband’s unprofitable horse farm in
the 1960s. Petitioner urges us to discount this factor because
the professional journal articles upon which petitioner relies
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