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rather she employs professional jockeys to ride the horses in all
races.
Discussion
Respondent points to three factors to show a lack of profit
motive for the years in issue:10 A history of losses,
petitioners' use of such losses to offset other income, and the
pleasure provided by the activity.
The parties stipulated that Gillian Johnston11 carried on
her steeplechase activity in a businesslike manner, maintained
complete and accurate books and records, had expertise in
steeplechase training and racing, and employed competent help in
carrying on such activity. Moreover, she consulted with other
recognized experts in the steeplechase business, including Dr.
Griggs.
During the years at issue, Gillian Johnston personally
operated the stables on a full-time basis. On weekdays, she
worked in the stables from 8:30 a.m. until late afternoon with
the help of one assistant. On weekends, she worked all day,
starting at 7 a.m., without a helper. The work she performed was
10 The Johnstons filed joint returns for 1987 and 1989, and
separate returns for 1988. Respondent did not issue a deficiency
notice to Gillian Johnston for 1988, and the notice issued to
petitioners for 1988 does not make a determination with respect
to the stables. Thus, 1987 and 1989 are the years in issue with
respect to GJ Stables.
11 With respect to GJ Stables, although respondent issued a
joint notice of deficiency to the Johnstons for 1987 and 1989,
the parties stipulated that it was Gillian Johnston who operated
the stables during the years in issue.
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