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1991 for which his financial information was made available to
the Court, petitioner reported substantial losses from the horse
activity. Petitioner has not introduced evidence of even a
single profitable year, although he did offer uncorroborated
testimony that he previously sold a cattle ranch at a profit and
sold a portion of his current horse ranch in 2001 to a relative
at a profit.
In contrast to his history of losses from his horse
activity, the record shows that petitioner was a successful
attorney. For the years in question, petitioner was able to use
losses from his horse activity to offset income earned from the
practice of law. The magnitude of petitioner’s losses from his
horse activity and the substantial tax benefits petitioner
received by offsetting those losses against income from his law
practice support the view that petitioner did not engage in his
horse activity for profit.
Petitioner testified that he was an expert in raising and
training horses. He grew up on his father’s cattle and horse
farm, has a degree in animal husbandry, and has focused on
training horses for the past 25 years. Petitioner’s testimony
that he is an expert in raising and training horses and that he
had no need to consult with advisers about such matters is not
contradicted. Petitioner also testified that he spent
approximately one-half of his time on his horse activity.
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