Janet D. Reed - Page 3

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               After respondent's acceptance of petitioner's tax returns, the         
          resulting tax deficiencies and additions to tax in dispute are as           
          follows:                                                                    
                                        Additions to Tax                              
               Year      Deficiency     Sec. 6651(a)(1)   Sec. 6654                   
          1988         ---               ---            ---                           
          1989         ---               ---            ---                           
          1990      1$12,485           $3,319           $779                          
          1991        14,178            1,045            241                          
          1992       135,031            8,903          1,523                          
          1993       128,390            5,656            911                          
               1    These amounts do not take into account prepayment credits         
          in the amounts of $816, $783, $792, $2, $580, and $801 for tax              
          years 1988, 1989, 1990, 1991, 1992, and 1993, respectively.                 
               Following concessions,1 the sole unagreed matter concerns              
          petitioner's entitlement to losses sustained from certain cattle-           
          ranching business activities. In this regard, we must determine             
          whether petitioner conducted these cattle-ranching business                 
          activities as a sole proprietor or through Spirit Horse Ranch,              
          Inc., during the years at issue.2                                           
               All section references are to the Internal Revenue Code as in          
          effect for the years in issue.  All Rule references are to the Tax          
          Court Rules of Practice and Procedure.                                      




               1    Petitioner agrees that except for the disallowance of             
          the Schedule F losses, respondent's income adjustments in the               
          notices of deficiency are correct.                                          
               2    At trial, we found that the cattle-ranching activities            
          were operated for profit.                                                   




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