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show taxpayer used records to improve losing venture), affd.
without published opinion 202 F.3d 264 (5th Cir. 1999).
Petitioners did not prove that their books and records were
kept or used in a businesslike manner. In addition, petitioners
did not maintain ERE’s operational records in a businesslike
manner. Petitioners could not make meaningful decisions
regarding their breeding activities from the incomplete
operational records they maintained.
b. Similarity to Other Activities of the Same
Nature
Petitioners argue that the breeding of each species should
be evaluated as a separate activity. They claim that each
breeding activity was conducted in a similar manner to
successful breeding activities. However, petitioners did not
introduce credible evidence of which species were successfully
bred and how successful breeding activities were conducted. See
Wesinger v. Commissioner, T.C. Memo. 1999-372; Filios v.
Commissioner, T.C. Memo. 1999-92, affd. 224 F.3d 16 (1st Cir.
2000); sec. 1.183-2(c), Example (4), Income Tax Regs. Thus, we
are not in a position to evaluate whether petitioners’ exotic
animal breeding activity was conducted in a manner substantially
similar to that of other profitable animal breeding operations.
c. Changes Made To Foster Profitability
Petitioners argue that several changes in operating methods
support their claim of a businesslike operation. First,
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