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Petitioners maintained complete records of their expenses
from their horse breeding and horse racing activities during the
years 1988 through 1996. Petitioners personally keep the books
and pay the bills in their horse breeding and horse racing
activities.
Neither petitioner nor Anna Dishal (Mrs. Dishal) has ever
been engaged in any farming, breeding, or racing business other
than the horse activities in which they have been engaged between
1976 and 1996. Neither petitioner nor Mrs. Dishal rides horses at
all.
Between 1989 and 1996, petitioners had income from purses
from horse races, sales of horses to third parties, from
breeders' awards, and from owners' awards.
OPINION
The Commissioner's determinations are presumed correct, and
the taxpayer bears the burden of proving otherwise. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933).
Section 183 (a) generally limits the amount of expenses that a
taxpayer may deduct with respect to an activity "not engaged in for
profit" to the deductions provided in section 183(b). Section 183
(b) (1) provides that deductions which would be allowable without
regard to whether such activity is engaged in for profit are to be
allowed. Section 183(b)(2) further provides that deductions which
would be allowable only if such activity were engaged in for profit
are to be allowed, but only to the extent that, the gross income
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Last modified: May 25, 2011