- 32 -
1993 through 1996. We are unpersuaded by this allegation. While
the horse activity’s operating expenses did in fact decrease
during the second 4-year period, this decrease was not due to any
special effort made by petitioner. It was due primarily to a
decrease during the latter 4-year period of the horse activity’s
boarding/training expenses. From 1993 to 1996, petitioner began
showing Kart Blanche and Bogaz more frequently than in prior
years. Given that these two horses were relatively young as of
January 1, 1993, and that they had received minimal training
beforehand, the need for them to train for the shows, and hence
the training expenses, were naturally greater during the earlier
4-year period.17 As the horses were trained, their training
expenses obviously declined. Such a decline occurred naturally
and did not result from any special effort by petitioner to
change operating methods, adopt new techniques, or abandon
unprofitable methods.18
17 We note that petitioner deducted “training” expenses for
1988, then deducted “boarding and training” expenses for 1989
through 1996, and then deducted “training” expenses for 1997
through 2002. We understand the deduction of “boarding/training”
to include the cost of boarding the horse at the training
facility as part of its training.
18 In the same vein, we also reject petitioner’s assertion
that she personally learned to train horses from 1992 through
1996 and thus was able to reduce expenses by training her horses
after 1996. Petitioner’s 1997 through 2002 Federal income tax
returns claim deductions for training in the total amount of
$17,276.
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011