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rides in Western pleasure events, English riding events, and
trail riding events for which she has won awards. The majority
of the Schedule F expenses for the years at issue were
attributable to his daughter's training, attire, and
participation in shows. This fact, coupled with the other
factors enumerated above, indicates that petitioners did not
engage in the farm activity for profit, but for personal
gratification.
Based on the foregoing and considering all the facts and
circumstances, we conclude that petitioners did not have an
actual and honest profit objective for the years in issue.
Issue 5. Accuracy-Related Penalty
Respondent determined in the notice of deficiency that
petitioners are liable for the accuracy-related penalty imposed
by section 6662(a) for 1991 and 1992, and that the entire
underpayment of tax for each such year was due to negligence.
Section 6662(a) imposes a 20-percent penalty on the portion
of the underpayment attributable to any one of various factors,
one of which is negligence. The term "negligence" includes any
failure to make a reasonable attempt to comply with the
provisions of the internal revenue laws or to exercise ordinary
and reasonable care in the preparation of a tax return. Sec.
6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. Negligence also
includes any failure by the taxpayer to keep adequate books and
records or to substantiate items properly. Sec. 1.6662-3(b)(1),
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