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is noted that expenses for travel, shows, and boarding dogs were
substantial.
Accordingly, we hold that Zane did not enter into or
continue the dog breeding activity with the requisite profit
motive for the years before the Court.
Zane’s Cow and Dairy Farm Activity
Zane and Shannon argued on brief that Zane’s dog breeding
and cow and dairy farm activities were one activity and that the
cow and dairy farm activity was an expansion or extension of the
dog breeding activity. That argument was made, to some extent,
to make the point that Zane went into the cow and dairy farm
activity to help remedy or recoup some of the losses experienced
in the dog breeding activity. It was also contended that some of
his expertise in breeding dogs carried over into the breeding of
cows.
Section 1.183-1(d), Income Tax Regs., provides the
appropriate legal standard for determining whether two or more
activities constitute one or two activities. A “facts and
circumstances” standard is prescribed to ascertain whether the
activities are separate. “Generally, the most significant facts
and circumstances in making this determination are the degree of
organizational and economic interrelationship of various
undertakings, the business purpose which is (or might be) served
by carrying on the various undertakings”. Sec. 1.183-1(d)(1),
Income Tax Regs.
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