James C. and Vivian C. Dodge - Page 2

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               Year                Deficiency          Sec. 6662                      
               1991                $11,543             $2,165                         
               1992                12,634         2,311                               
               1993                12,387               2,489                         
          After concessions,2 the following issues remain for our                     
          consideration: (1) Whether petitioners' horse-breeding activity             
          during the taxable years 1991, 1992, and 1993 was engaged in for            
          profit; and (2) whether any underpayment of tax is due to either            
          negligence or intentional disregard of rules or regulations, or a           
          substantial understatement of income tax.                                   
                                  FINDINGS OF FACT3                                   
               At all times relevant to this case petitioners were husband            
          and wife and resided in West Liberty, Ohio.  They filed joint               
          Federal income tax returns for all 3 years at issue.                        
               James Dodge (Mr. Dodge) was an attorney and president of               
          Brad Bern Corp. located in Cincinnati, Ohio, during the years at            
          issue.  From 1990 through 1993, Mr. Dodge was very active at Brad           
          Bern Corp., working on average 12 hours a day, 4 days a week for            
          the corporation.  He lived at petitioners' second home in                   


               2Respondent disallowed unsubstantiated interest deductions             
          of $5,099 and $7,713 in 1991 and 1992, respectively.  In                    
          addition, respondent determined that petitioners understated                
          interest income in the amount of $66 in 1991.  Since petitioners            
          failed to address either of these issues in their brief, we treat           
          this as a concession by petitioners and find for respondent.                
          Theodore v. Commissioner, 38 T.C. 1011, 1041 (1962).                        
               3The stipulation of facts and the attached exhibits are                
          incorporated by this reference.                                             






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