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that Patrick F. Sheehy paid in 1991 to acquire interests in
thoroughbred racehorses,1 and (2) whether petitioners are liable
for the section 6662(a) accuracy-related penalty for 1991.
All section references are to the Internal Revenue Code for
the year in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure. Some of the facts have been
stipulated and are found accordingly. The stipulation of facts and
the attached exhibits are incorporated herein by this reference.
FINDINGS OF FACT
At the time they filed their petition, petitioners Patrick F.
and Arlene Gwon Sheehy, husband and wife, resided in Newport Beach,
California. They timely filed their 1991 Federal income tax
return.
Background
Patrick F. Sheehy (petitioner) is a medical doctor who
specializes in oncology and hematology. He is also engaged in the
business of developing champion racehorses. Mrs. Sheehy is a
research ophthalmologist.
Super Horse, Inc.
During the year in issue, Super Horse, Inc. (Super Horse)
purchased thoroughbred racehorses and sold interests in these
horses to investors. Super Horse assisted individuals in
1 In the notice of deficiency, respondent allowed
petitioners $12,675 as a depreciation deduction in lieu of the
claimed $165,000 deduction for research and development expenses.
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