- 10 -
house, barn, or garage or other places. Petitioner retained some
canceled checks, but his records were incomplete.
Petitioner did not develop a business plan. He never
consulted an accountant or purchased accounting software for his
horse breeding activity. Petitioner did not prepare a written
analysis of the time it would take him to break even or make a
profit.
Petitioner’s wife met with two people in the horse breeding
business. She discussed the financial aspects of their
respective operations and the feasibility of entering into the
horse breeding business. Petitioner did not present any evidence
as to how these discussions affected the conduct of the activity.
Petitioner did not conduct the horse training and breeding
activity in a businesslike manner. This factor weighs against
petitioner.
2. The Expertise of the Taxpayer or His Advisers
A taxpayer’s expertise and extensive study of an activity’s
accepted business and economic practices, or consultation with
experts, may indicate a profit objective. Sec. 1.183-2(b)(2),
Income Tax Regs.
Petitioner did not consult with experts to become
knowledgeable about techniques of training and breeding horses,
nor did he learn the economics of the activity. As previously
indicated, petitioner’s wife spoke with two persons about the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011