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total losses of $441,289. The size of her losses compared
to only a small profit is not indicative of a profit motive.
Petitioner argues that she has the opportunity to earn
a substantial ultimate profit through the sale of
potentially valuable horses. Petitioner introduced evidence
that horses of the bloodlines she used in breeding Borissa
have sold for $300,000, $150,000, $140,000, and $120,000.
Petitioner also testified that some purebred Arabian
stallions have been syndicated for multimillion dollar
values. A taxpayer’s belief that she could one day sell a
horse for a substantial amount of revenue and a
correspondingly large profit may be indicative of a profit
motive if that belief is adequately supported. See McKeever
v. Commissioner, supra; Dawson v. Commissioner, T.C. Memo.
1996-417. However, petitioner has never produced a horse of
the caliber that would generate such substantial revenue.
Under the circumstances of this case, the possibility of a
highly speculative profit is insufficient to outweigh the
substantial losses and relatively minuscule gain over a 16-
year period. See McKeever v. Commissioner, supra.
This factor weighs in favor of respondent’s position.
8. The Financial Status of Petitioner
Substantial income from sources other than the activity
may indicate that the taxpayer is not engaged in the
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