- 65 -
7. Amount of Occasional Profits--No profits and only
limited receipts have been reported from Zane’s dog breeding
activity. This factor is unfavorable for Zane.
8. Financial Status of the Taxpayer--Zane and Shannon’s
gross income, without considering income adjustments they
conceded, was $382,020, $277,979, $320,569, and $718,466 for the
1998, 1999, 2000, and 2001 years. For each of the next 3 years,
their income exceeded $700,000 annually. The potential for tax
benefits from the claimed dog breeding activity losses was
substantial. This factor favors respondent’s determination.
9. Elements of Personal Pleasure--There is no question
about the pleasure Zane derived from his involvement in the dog
breeding activity. He has been involved with dogs since he was
12 years old and enjoyed judging shows and has had the
opportunity to travel all over the world. It is noted that his
judging was not compensated and that he traveled at his own
expense and that the travel expenses have been deducted. He was
an acknowledged expert concerning Staffordshire Bull Terriers and
American Staffordshire Terriers worldwide.
Considering all of the above-discussed factors and the
record as a whole, it appears that Zane’s dog breeding activity
was one of personal interest and more of a hobby than a business.
It was the participation in showing and judging terriers that
attracted him to the activity and not the profit objective. It
Page: Previous 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Next
Last modified: March 27, 2008