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consistent with an intent to improve profitability, a profit
motive may be indicated. Sec. 1.183-2(b)(1), Income Tax Regs.
Petitioner argues that she has changed her methods over the
years in an effort to improve profitability. To advance this
argument, petitioner testified that: (1) From 1992 through 1996,
she stopped breeding her horses because she perceived a downturn
in the Arabian horse market; (2) she began vaccinating, worming,
and performing other basic veterinary services to save money; and
(3) in 2001, she switched show disciplines to dressage because
she felt dressage was becoming more popular.
Petitioner introduced no evidence to corroborate her
testimony that there was a downturn in the Arabian horse market
in the mid-1990s. Even if we accept petitioner’s statements as
fact, the halt in her breeding activity would not weigh in her
favor. Petitioner reported the following total expenses from her
horse activity on her Schedules C:
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