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internal revenue laws, and the term "disregard" includes any
careless, reckless, or intentional disregard of rules or
regulations.
Although the Court holds that petitioner's activity was not
engaged in primarily for profit during 1996, petitioner,
nevertheless, realized a profit during 1997. The activity was
discontinued during 1998 when petitioner's creditors foreclosed
on the horses. While the undercapitalization of the activity
underscores the Court's holding on the section 183 issue, the
Court cannot conclude that the totality of the facts warrants
imposition of the penalty under section 6662(a). The Court,
therefore, sustains petitioner on this issue.
Decision will be entered for
respondent for the deficiency and
for petitioner for the penalty.
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Last modified: May 25, 2011