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opinion 647 F.2d 170 (9th Cir. 1981). This Court has recognized
that the startup phase of a horse breeding activity is 5 to 10
years. Engdahl v. Commissioner, 72 T.C. 659, 669 (1979). The
1997 and 1998 losses were incurred within the recognized period
of the startup of a horse breeding activity. This factor
therefore does not weigh against petitioners’ having a profit
motive.
F. The Amount of Occasional Profits
The amount of occasional profits, if substantial in relation
to losses incurred or the taxpayer’s investment, may indicate a
profit objective. See sec. 1.183-2(b)(7), Income Tax Regs.
Petitioner testified that he earned a small profit from the horse
activity in 2000; however, he produced no evidence to support
this assertion. Petitioners incurred losses in 1997 and 1998 far
in excess of the small profit that petitioner claimed to have
realized in 2000. Therefore, the relatively small amount of
profit petitioners purportedly realized does not indicate a
profit motive.
G. Petitioners’ Financial Status
Substantial income from sources other than the activity in
question, particularly if the activity’s losses generated
substantial tax benefits, may indicate that the activity is not
engaged in for profit. Sec. 1.183-2(b)(8), Income Tax Regs.
Petitioner operated his chiropractic practice as a sole
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