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profitability. See Engdahl v. Commissioner, 72 T.C. 659, 667-668
(1979); sec. 1.183-2(b)(1), Income Tax Regs.
As to their manner of conduct, during the taxable years in
issue, petitioners, for the most part, rented more than one-half
of the available stalls in their barn. Petitioners provided
detailed monthly boarding records for 1999 and 2000, which list
each horse and the expenses incurred. From the inception of
their activities in 1992, through the years in issue, petitioners
also maintained extensive and separate accountings for all of
their horse-boarding income and expenses using a software program
tailored to small farm operators. Based on these facts, we are
satisfied that petitioners’ maintenance of complete and accurate
records in this case supports a profit objective. See Elliott v.
Commissioner, 90 T.C. 960, 971-972 (1988), affd. without
published opinion 899 F.2d 18 (9th Cir. 1990); sec. 1.183-2(b),
Income Tax Regs.
As to petitioners’ other business practices, although
petitioners made no great effort to advertise their boarding
service to the general public, we do not find their lack of
advertising indicative of an absence of profit motive, as their
word-of-mouth approach in attracting clientele was clearly
successful, as they had, at one point during the years in issue,
80 percent of their stalls rented.
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