Sidney Dishal and Anna Dishal - Page 2

                                      - 2 -                                           
     are to the Tax Court Rules of Practice and Procedure, unless                     
     otherwise indicated. References to petitioner are to Sidney Dishal.              
          After a concession,1the issue for decision is: Whether                      
     petitioners engaged in their horse breeding and horse racing                     
     activities during the years in issue with the objective of making a              
     profit within the meaning of section 183. We hold they did.                      
                                   FINDINGS OF FACT                                   
          Some of the facts have been stipulated and are so found. The                
     stipulated facts and the accompanying exhibits are incorporated                  
     herein by this reference. At the time the petition in this case was              
     filed, petitioners resided in Piedmont, California.                              
          In 1945, petitioner went to work as a fabric salesman in                    
     southern California and was extraordinarily successful in that                   
     pursuit. In 1958, petitioner left his sales job and started a cotton             
     processing business which manufactured cotton padding used in                    
     furniture and bedding. By his business and management skills,                    
     petitioner made the business unusually profitable. Petitioner                    
     partially retired from that business in 1990 and fully retired from              
     it by 1992.                                                                      
          Petitioners were engaged in thoroughbred horse breeding and                 
     racing activities during the taxable years 1992, 1993, and 1994.                 
     Petitioners began their horse activities in 1976 with one horse.                 


               1 Respondent conceded that petitioners were not liable for             
          the accuracy-related penalty pursuant to sec. 6662 (a) for each             
          of the years in issue.                                                      





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