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Although Dr. Harrington recognized that it was risky to rely
on an untested foal, he believed that Provoking had the right
color and bloodlines to sire Appaloosa horses that would have
valuable palomino and Appaloosa characteristics.
In 1993, petitioners moved from Minnesota to New Mexico.
They brought with them the stallion, Provoking, and one brood
mare. Petitioners purchased a 2-1/2 acre property in Algodones,
where they lived and kept their horses. The house had a vineyard
that occupied one-half acre, and the remaining acreage became
available for the horse activity.
During 1990 through 1998, petitioners suffered net losses
totaling $110,376 from Dr. Harrington’s horse-breeding activity,
claimed on Schedule F, Profit or Loss From Farming. The losses
were consistent and sustained from year to year, ranging from
$10,959 to $16,600 per year. During this 9-year period,
petitioners received total gross receipts of only $6,807 from the
horse-breeding activity. Petitioners claimed losses of $12,138,
$11,290, and $10,303, on gross receipts of $712, $0, and $600,
for 1996, 1997, and 1998, respectively. Petitioners did not
claim Federal income tax deductions for the expenses of the horse
activity in 1999. With such small acreage, Dr. Harrington had to
buy hay to feed the horses. Dr. Harrington in 1999 sold two
mares and two foals for $1,502 but kept the stallion, and a 2
year old and 3 year old that he is still trying to sell.
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Last modified: May 25, 2011