- 10 -
to local tack shops, where they were either displayed near the
cash register or posted on a bulletin board. Mr. Abbene also
advertised Blue Ribbon's services by circulating a rate schedule
to approximately 100 individuals included on a mailing list that
he purchased from the American Horse Show Association.12 Blue
Ribbon claimed advertising expenses in the amounts of $925 for
1990, $351 for 1991, and $549 for 1992.
Mr. Abbene paid an accountant, George Seaford (Mr. Seaford),
to maintain Blue Ribbon's records during the years in issue.
Although Mr. Abbene kept a separate bank account for Blue
Ribbon's expenditures, he did not keep a formal ledger of Blue
Ribbon's income. Rather, Mr. Abbene would place photocopies of
the checks received for riding lessons and prize winnings in an
envelope which was forwarded, every 3 months, along with the bank
statements to Mr. Seaford. Mr. Seaford performed quarterly
reconciliations of the bank statements and prepared Blue Ribbon's
Federal income tax returns.
During the years in issue, Mr. Abbene did not maintain any
formal business plan or formal business strategy for the
operation of Blue Ribbon. Mr. Abbene did not prepare or maintain
any formal budgets, operating statements, or analyses of Blue
12 Petitioners attached to their posttrial brief photocopies of
two advertisements purportedly placed in the New York Production
Guide during the years in issue. These advertisements are not
part of the record in the instant case, and we give them no
consideration in our analysis.
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