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the burden of proof shifts to respondent. Sec. 7491(a)(1); Rule
142(a). Because the issue in this case is a legal one, we reach
our decision without regard to the burden of proof. However,
petitioners contend that section 7491(a) and Rule 142(a) are
applicable with respect to the increases in the deficiencies
pleaded in respondent’s answer. They are correct on this point.
In deciding whether petitioners’ horse-boarding activity was
engaged in for profit during the taxable years at issue, we must
inquire whether petitioners had an actual and honest objective of
making a profit from the activity. Dreicer v. Commissioner, 78
T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205 (D.C.
Cir. 1983). The taxpayers’ expectation need not be a reasonable
one. Id. at 644-645; Golanty v. Commissioner, 72 T.C. 411, 425
(1979), affd. without published opinion 647 F.2d 170 (9th Cir.
1981); sec. 1.183-2(a), Income Tax Regs. Whether there is
present an actual and honest objective of making a profit is a
question of fact that is to be resolved upon a consideration of
all relevant circumstances, with the greatest weight being given
to the objective factors rather than the taxpayers’ expression of
their intent. Dreicer v. Commissioner, supra at 645; Golanty v.
Commissioner, supra at 426; sec. 1.183-2(a) and (b), Income Tax
Regs.
Section 1.183-2(b), Income Tax Regs., lists these relevant
factors that we now consider: (1) The manner in which the
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