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records may indicate a profit objective. Sec. 1.183-2(b)(1),
Income Tax Regs.
Petitioner commingled the financial affairs of the horse
training and breeding activity with his personal finances. He
paid all the expenses of the horse activity from his personal
account, and the horse activity maintained no financial accounts
of its own. This commingling of funds is an indication that the
activity is a hobby rather than a business for profit. See
Ballich v. Commissioner, T.C. Memo. 1978-497. Petitioner also
did not generate or maintain business documents or records. We
conclude that petitioners did not conduct the horse training and
breeding activity in a businesslike manner, and this fact
indicates that the activity was not engaged in for profit.
B. Expertise of Petitioner
A taxpayer’s expertise, research, and study of an activity,
as well as his consultation with experts, may be indicative of a
profit objective. Sec. 1.183-2(b)(2), Income Tax Regs.
Petitioner testified that he consulted with experts, read books,
and attended seminars and conferences about the subjects of horse
training and breeding. Although petitioner testified that he
became knowledgeable about techniques of training and breeding
horses, he was not knowledgeable about the economics of the
activity. Significantly, petitioner did not seek professional
advice on the economic aspects of horse training and breeding.
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