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miles to his home only to return to the boarding facility 4 or 5
hours later in order to perform his morning activities.
Petitioner managed the financial affairs of his horse
activity through his personal checking account. The management
of this dual-purpose account was facilitated by the use of a
computer program petitioner had created. By design, petitioner
used this program to distinguish between personal expenditures
and expenditures made in furtherance of his horse activity.
Other than his check register, however, petitioner did not
maintain formal financial records relating to his horse activity.
Nonetheless, petitioner did keep detailed records regarding the
training, care, and pedigree of his horses.
Petitioner did not maintain his horses for entertainment or
other recreational purposes. Petitioner did not ride his horses,
nor did he permit others, except for qualified jockeys, to ride
his horses.
For taxable years 1986 through 1991, petitioner incurred the
following losses with respect to his horse activity:
Year Loss
1986 $35,631
1987 26,990
1988 39,834
1989 32,996
1990 39,324
1991 36,039
In 1990 and 1991, petitioner used the respective losses of
$39,324 and $36,039 to offset income he received from Baltimore
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