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Regs. However, losses that extend beyond the customary
startup stage may indicate that the activity is not engaged
in for profit. Engdahl v. Commissioner, supra at 669; sec.
1.183-2(b)(6), Income Tax Regs.
From 1988 through 2000, and 2002 through 2003,
petitioner reported total Schedule C losses of $441,289. In
2001, petitioner reported a $209 profit from her horse
activity, due to the sale of Bogaz for $20,000.
Petitioner argues that the history of losses does not
indicate she lacked a profit motive because her activity is
in the startup stage. This Court has recognized that the
startup stage for a horse-breeding activity may be 5 to 10
years. Engdahl v. Commissioner, supra at 669; McKeever v.
Commissioner, T.C. Memo. 2000-288; Dodge v. Commissioner,
supra. Petitioner argues that her startup stage should be
extended because she encountered unforseen circumstances,
including the death of two foals in 1991 and 1998,
respectively, and the depressed Arabian horse market in the
mid-1990s.
The applicable regulations do not provide for an
extension of the startup stage on account of unforeseen
circumstances, and petitioner cites no caselaw to support
her argument. Instead, section 1.183-2(b)(6), Income Tax
Regs., states: “If losses are sustained because of
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