- 8 - them. Several weeks later someone discovered that Khola and Kholetta had fallen into a sinkhole on the farm and died. These horses had been central to the horse-breeding activity. Mr. Morley "lost" other horses too. He leased one horse to a man who kept the horse inside an electric fence. One night, the man forgot to turn on the electric fence. The horse escaped, a car hit it, and the horse died. Additionally, a prize-winning stallion, T.A. Kolero,6 stepped into a hole and broke its leg. Consequently, Mr. Morley had to put T.A. Kolero to sleep. On Schedule F, Profit or Loss From Farming, attached to their 1988, 1989, and 1990 Federal income tax returns, petitioners reported gross receipts from the horse-breeding activity in the amounts of $2,229, $3,236, and $5,400, respectively. On Schedule F attached to their 1985, 1986, 1987, 1988, 1989, 1990, and 1991 Federal income tax returns, petitioners reported net losses from the horse-breeding activity in the amounts of $27,767, $47,387, $52,379, $52,142, $59,266, $41,581, $34,530, respectively. Losses sustained by petitioners were out-of-pocket economic losses with the exception of amounts deducted for depreciation. 6 For clarity, we note that T.A. Kolero and T.O. Bolero were different horses.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
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