Julie A. Toth - Page 4

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          petitioner had established a limited liability company called               
          Ghost Oak Farm, L.L.C., to operate the Newberg property.  She               
          currently earns approximately $3,000 per month from Ghost Oak               
          Farm, L.L.C.                                                                
               Petitioner filed her Federal income tax returns for the                
          years at issue on April 5, 2004.  Respondent sent petitioner                
          notices of deficiency for the years at issue on April 19 and 26,            
          2004, respectively.  The notices of deficiency for the years at             
          issue were based upon third party payor information and not upon            
          information reported on petitioner’s filed returns.                         
               The parties have stipulated that the income reported on                
          petitioner’s Federal income tax returns for 1998 and 2001 is                
          correct.  Petitioner’s claimed itemized deductions are not in               
          dispute.  Petitioner reported the income and expenses from her              
          horse boarding and training activities on Schedule C, Profit or             
          Loss From Business, but concedes that the expenses attributable             
          to the activities are not deductible pursuant to section 162.               
          Rather, petitioner contends that the horse boarding and training            
          expenses are deductible pursuant to section 212.  Respondent                
          concedes petitioner engaged in horse boarding and training                  
          activities for profit5 beginning in 1998 and does not dispute the           




               5 Respondent does not argue the application of sec. 183.               





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