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Memo. 1993-534, affd. per curiam 92 F.3d 1176 (4th Cir. 1996);
Osteen v. Commissioner, T.C. Memo. 1993-519. The care and
maintenance of horses demands a large measure of laborious and
unpleasant work. Petitioners were responsible, inter alia, for
mucking and cleaning the stalls, grooming the horses, and caring
for mares which had recently foaled. However, while we do not
reject petitioners' contention that the day to day operation of
Silk Oak demands a great deal of hard work, we note that
petitioners' introduction into horse breeding was precipitated by
their daughter's love of horses. We also believe that
petitioners were partially motivated by personal reasons in
engaging in the horse-breeding activities, both enjoying life on
a farm and using the horses for recreational pleasure. This
factor favors neither party.
Given a consideration of all relevant factors, we conclude
that petitioners did not engage in the operation of Silk Oak with
the intent of generating a profit. We, therefore, sustain
respondent on this issue.
Accuracy-Related Penalty Under Section 6662(a)
Respondent determined that petitioners are liable for the
accuracy-related penalty provided under section 6662(a). The
accuracy-related penalty is equal to 20 percent of any portion of
an underpayment attributable to a taxpayer's negligence or
disregard of rules and regulations. Sec. 6662(a) and (b)(1).
The term "negligence" includes any failure to do what a
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