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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. After concessions by petitioners, the issue remaining
to be decided is whether petitioners may deduct losses incurred
by Mr. Abbene's wholly owned S corporation, Blue Ribbon
Thoroughbred Breeding Farms, Inc. (Blue Ribbon), in its horse-
related activities, or whether such losses are nondeductible
because Blue Ribbon did not engage in such activities for profit
within the meaning of section 183(a).
FINDINGS OF FACT
Some of the facts have been stipulated for trial pursuant to
Rule 91. The parties' stipulations of fact are incorporated
herein by reference and are found as facts in the instant case.
At the time they filed their petition, petitioners resided at 6
Tide Mill Road, Nissequogue, New York (6 Tide Mill Road).
Petitioners are husband and wife and have one child, Elena Abbene
(Elena), born on October 27, 1967. During the years in issue,
Elena lived with petitioners, who were her sole means of support.
Petitioners filed timely joint Federal income tax returns for all
years in issue.
Prior to and during the years in issue, Mr. Abbene was
employed as a sales representative with Pride Solvents & Chemical
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