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in determining whether a particular activity is engaged
in for profit or in applying section 183. * * *
Falling Water Way is at the center of petitioner’s
horse activity. Her horses are kept on the property and are
bred, fed, and watered there. Petitioner testified that she
trains her horses in the arena at Falling Water Way.
However, Falling Water Way also includes petitioner’s four-
bedroom house and a garage unrelated to her horse activity.
With the exception of the house and the garage, we conclude
that Falling Water Way is a part of petitioner’s horse
activity. Therefore, any appreciation attributable to the
horse facilities and land at Falling Water Way may be taken
into consideration when determining whether petitioner
engaged in her horse activity for a profit.
Gavilan Hills is approximately 5 miles from Falling
Water Way. Even though petitioner has not made significant
improvements to the property since 1991, petitioner used
Gavilan Hills to exercise and train her horses throughout
the years in issue. Gavilan Hills was not used for any
purpose unrelated to petitioner’s horse activity. We
conclude that Gavilan Hills is a part of petitioner’s horse
activity. Therefore, any appreciation of Gavilan Hills may
be taken into consideration when determining whether
petitioner engaged in her horse activity for a profit.
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