
    Israel O. Blake, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket Nos. 82668, 90661.
    Promulgated December 29, 1938.
    
      Julius Weiss, Esq., for the petitioner.
    
      Allen Aiken, Esq., for the respondent.
   OPINION.

Murdock :

The Commissioner has disallowed the losses on the stock farm on the ground that the farm was operated by the petitioner as a hobby rather than as a business for profit. He relies almost entirely upon the fact that the operation of the business has resulted in a long and uninterrupted series of losses. The evidence as a whole, however, preponderates in favor of the petitioner. This small farm was operated on a relatively modest scale. The total investment of the two partners was originally about $40,000. Only about ten or twelve horses were owned at a time. The petitioner did not live at the farm at any time. The place where he spent his summers was about thirty miles from the farm. He admits that he has always been very fond of horses and that he derives the usual pleasure from a winner. The principal items of expense were for labor and feed. The expenses included the cost of some horses. The operation of the farm was businesslike in every way, unless the series of losses may be looked upon as unbusinesslike. The petitioner, who is quite keen and alert despite his advanced age, testified without contradiction that he entered into the business for the purpose of making a profit and has always conducted the business for that purpose. He furthermore testified with considerable conviction that he has no reason to regard this venture as an unprofitable one, even though he has sustained these losses. The point he makes is that he has a very valuable collection of horses to show for his investment, as well as some real estate which has constantly increased in value during the period of his holding. The whole question here is to determine whether, as a matter of fact, the intention of the petitioner has been to realize a profit from the operation of this farm, and this question may not be determined solely from the recurrence of losses. Commissioner v. Field, 67 Fed. (2d) 876; Whitney v. Commissioner, 73 Fed. (2d) 589; Commissioner v. Widener, 33 Fed. (2d) 833. We are satisfied from the entire record that such was his intention and that the Commissioner erred in concluding that he conducted the farm as a hobby or for personal pleasure. There is no question about the amount of the losses or of their relationship to the business.

Decision will be entered under Rule 50.  