- 13 - During the years in issue, petitioners advertised their horses primarily by showing them at horse shows. They also had baseball caps made bearing the Midwest Spanish Arabians logo. Petitioners sold some and gave away some of these caps. They advertised horses for sale by word of mouth and once in the newspaper. Petitioner did not insure his horses. In July 1990, petitioners obtained from Empire Bank a $15,000 home equity line of credit, secured by a mortgage on their residence. They used the line of credit to finance some of the improvements to the property that they planned to use in their Arabian horse breeding activity. Petitioners did not have a separate bank account for their Arabian horse activity. Petitioners paid the expenses for their horse activity from their personal account. Petitioners have kept records of the income and expenses of their Arabian horse activity since 1990. Petitioner kept receipts for expenses and he made notes on the expense checks. At the end of each year, petitioner prepared a summary of expenses and gave it to his accountant to prepare petitioners’ income tax return. Petitioner kept a ledger beginning in 1990 of petitioners’ expenses from 1990 to 1993. Beginning in 1994, Mrs. Davis used a computer to keep a record of income and expenses. However, thePage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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