- 6 - losses and ultimately make a profit. Sec. 1.183-2(b)(6), Income Tax Regs. (stating that losses incurred during the initial phase of a business are not necessarily an indication that the activity was not engaged in for profit). Respondent contends that the fact that petitioners have never conducted a successful horse- breeding and training business indicates a lack of profit objective. We conclude that this factor is outweighed by the following factors. Petitioners carried on the activity in a businesslike manner. They advertised in trade magazines, attended seminars, and kept records in a manner consistent with an intent to improve profitability. In addition, they abandoned an unprofitable method in a manner consistent with an intent to improve profitability (i.e., determining that the Skipper W bloodline would be more profitable). See sec. 1.183-2(b)(1), Income Tax Regs. Petitioners did not ride the horses for pleasure. See sec. 1.183-2(b)(9), Income Tax Regs. (stating that the presence of personal pleasure may indicate the lack of a profit objective). Ms. Wilson had significant experience training horses, and petitioners consulted with experts relating to the caring, feeding, and training of horses. In addition, petitioners regularly consulted with their accountant with respect to the activity’s books and records. Petitioners, in addition to theirPage: Previous 1 2 3 4 5 6 7 8 NextLast modified: November 10, 2007