- 14 -
Neither petitioner nor his wife has ever been involved in
any other entrepreneurial ventures. This is a neutral factor.
6. The Taxpayer’s History of Income or Losses With
Respect to the Activity
The fact that a taxpayer incurs a series of losses beyond an
activity’s startup stage may indicate the absence of a profit
objective as to that activity unless the losses can be blamed on
unforeseen or fortuitous circumstances beyond the taxpayer’s
control. Sec. 1.183-2(b)(6), Income Tax Regs.; cf. Golanty v.
Commissioner, 72 T.C. at 427 (horsebreeding activity may be
engaged in for profit despite consistent losses during the
startup phase).
Petitioner attributes part of his losses to a depressed
market due to the September 11, 2001, terrorist attacks.
Petitioner testified that, before 2001, he could have received
$10,000 to $20,000 dollars for a 3-year-old foal, but in 2004,
petitioner believed that a 3-year-old foal would yield a maximum
of $10,000 to $12,000 dollars. Petitioner had several years of
losses because he did not have any 3-year-old foals to sell.
Petitioner had losses totaling $93,893 for tax years 1997,
1998, and 1999 combined. While the events of September 11, 2001,
may have depressed the market, petitioner did not make any sales
or have any foals available for sale during the years in issue.
There is no evidence of any gross receipts from this activity at
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011