Thomas B. Drummond - Page 2

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               The issues remaining for decision are:                                 

               (1)  Was the drawing that petitioner sold during 1989                  
          "property held by the taxpayer primarily for sale to customers in           
          the ordinary course of his trade or business" within the meaning            
          of section 1221(1)?  We hold that it was not, and we further hold           
          that the gain that petitioner realized from the sale of that                
          drawing is long-term capital gain.2                                         
               (2)  Did petitioner engage in his horse activity during                
          1989, 1990, and 1991 and his cattle activity during 1990 and 1991           
          with the objective of making a profit within the meaning of                 
          section 183?  We hold that he did not.                                      
               (3)  Is petitioner liable for 1989 and 1990 for the addition           
          to tax under section 6651(a)(1)?  We hold that he is not for 1989           
          and that he is for 1990 to the extent stated herein.                        
               (4)  Is petitioner liable for 1989, 1990, and 1991 for the             
          accuracy-related penalty under section 6662(a)?  We hold that he            
          is to the extent stated herein.                                             

          2  The parties agree that the Court's holding on the character-             
          ization of petitioner's gain from that sale will be dispositive             
          of the remaining issues presented under secs. 404(h)(1)(C) and              

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