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Rule 142(a); Keanini v. Commissioner, 94 T.C. 41, 46 (1990);
Hastings v. Commissioner, supra.
Petitioner is not entitled to a presumption that his horse
activity is engaged in for profit under section 183(d) because
petitioner’s gross income from his horse activity has not
exceeded deductions for any 2 years in the period of 7
consecutive taxable years ending with the first of the years in
issue. See sec. 183(d). The burden of proof has not shifted to
respondent. It remains on petitioner. See id.
B. Losses From the Horse Breeding Activity
Petitioner’s involvement with horses began in 1996, when he
and his wife purchased Nu Time Spot (NTS), an Appaloosa Stallion,
from a friend. Petitioner bought NTS as a foal. Petitioner
wanted to breed NTS but did not do so immediately, because foals
cannot be bred until they are at least 3 years old. Petitioner
also knew that prospective purchasers wanted older, well-trained
foals. Petitioner believed it was best to obtain broodmares and
breed foals.3 Petitioner and his wife hoped to sell the foals
and offer NTS as a stud.
Regulations promulgated under section 183 provide the
following nonexclusive list of factors which normally should be
considered in determining whether an activity was engaged in for
3 Petitioner had five broodmares and two 2-year-old foals
at the time of trial.
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