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dressage riding was on a personal, recreational basis. We think
it more likely than not that petitioner's decision to breed Sassy
was for the primary purpose of perpetuating what she believed to
be an excellent bloodline, and that any profit motive was merely
incidental to her primary purpose.
In light of the foregoing, we find that petitioner's
motivation behind producing the foal was primarily personal in
nature and that any profit motive that existed was merely
incidental. The transaction in which Daisy was sold was nothing
more than the sale of petitioner's personal, albeit capital,3
asset. The loss from the transaction is not within the
categories of losses allowed by section 165, or any other
provision of the Internal Revenue Code. Accordingly, petitioners
are not entitled to a long-term capital loss deduction for the
year 1990 in connection with the sale of Daisy.
In view of the foregoing, we need not address respondent's
other arguments related to this issue.
Accuracy-Related Penalty
Respondent determined that petitioners are liable for the
accuracy-related penalty imposed by section 6662(a). Section
6662(a) and (b)(1) imposes a penalty on any portion of an
underpayment which is attributable to negligence or disregard of
3Respondent, in her brief, suggests that Daisy was not a
capital asset in the hands of petitioner. No authority for this
proposition was stated and it would appear to us that, given the
express language of sec. 1221, which provides the definition of a
capital asset, Daisy clearly fits within that definition.
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