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advertising expenses during only 1 year of operation. Despite
substantial losses each year, petitioners did not step up
advertising efforts to increase revenue from animal sales.
d. Summary
Under the facts and circumstances of this case, petitioners
did not conduct their exotic animal breeding activity in a
businesslike manner.
This factor favors respondent’s position.
2. The Expertise of Petitioners or Their Advisers
Preparation for an activity by extensive study of its
accepted business, economic, and scientific practices or
consultation with industry experts may indicate a profit motive
where the taxpayer carries on the activity in accordance with
such practices. See sec. 1.183-2(b)(2), Income Tax Regs. A
taxpayer’s efforts to gain experience and to follow expert advice
may indicate a profit motive. See, e.g., Dworshak v.
Commissioner, T.C. Memo. 2004-249.
Petitioners learned about exotic animal breeding by
attending seminars and conferences, reading books and scientific
journals, and consulting experienced breeders. However,
petitioners did not present evidence that any of the experts they
contacted were experts in the economics of the exotic animal
breeding business or were successful in running such a business.
In addition, petitioners offered no evidence that the seminars
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