The 5th component of what the government looks for in a horse business is the taxpayer’s past success in similar or dissimilar activities. Similar activities may be a horse related business such as being a farrier, managing/owning a tack shop etc. Dissimilar activities may be a business that has nothing to do with horses. For example owning and running a gas station would be completely different. The key here is if the activity had a profit motive and how that activity progressed. If other activities (businesses) were owned and managed by the taxpayer successfully this is favorable when the IRS looks at the horse business. If the activity was not successful and the horse business is not successful this would weigh against the taxpayer. Other factors will weigh more heavily on the outcome of an audit. For myself this rule does not apply as I have not had other businesses.