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each realized in 1988 with regard to their investment in the
LB Partnership should not be allowed to offset petitioners'
nonpassive income.
We agree with respondent. The only evidence presented at
trial regarding petitioners' participation in the LB Partnership
was Joseph's uncorroborated testimony that he spent hundreds of
hours researching potential stallions to breed with La Barbara
and the 1988 calendar log that reflected 15 entries for phone
calls petitioners made relating to the LB Partnership. The
evidence petitioners presented at trial does not establish that
petitioners spent over 100 hours participating in the LB
Partnership. Petitioners have not met their burden of proof on
this issue. See Rule 142; Goshorn v. Commissioner, T.C. Memo.
1993-578.
We sustain respondent's determination that the section 469
passive activity loss rule applies and that petitioners are not
permitted to offset the loss from the LB Partnership against
their nonpassive income.
Additions to Tax
Section 6651(a)(1) provides that where a taxpayer fails to
timely file a Federal income tax return (determined with regard
to any valid extension of time for filing) and where such failure
is not shown to be due to reasonable cause rather than to willful
neglect, there shall be added to the tax due, for each month the
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