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Petitioner knew that Mr. Freidus was using the checks to make
investments on her behalf. Petitioner hoped that Mr. Freidus
would make good investments and earn profits. Petitioner would
often discuss potential real estate investments with Mr. Freidus
or Burns. If petitioner approved of a transaction, she signed
all the necessary documents. Petitioner knew of Mr. Freidus'
investment in horses but usually left the investment decisions to
Mr. Freidus. When Mr. Freidus would sell or lease a farm or a
horse as her agent, he discussed with petitioner the terms of the
documents that she signed.
Petitioner owned 16 jumper horses during the years in issue.
Petitioner's annual gross earnings from horse sales are as
follows: $375,000 for a horse named Nimmedor in 1988; $45,000 for
a horse named Urtola and $34,000 for a horse named Gold Falk in
1989; and $175,000 for a horse named Sebastian and $10,000 for a
horse named Le Val Blanc in 1990. The purchaser of Nimmedor,
Donna Furth, paid the $375,000 sale price by wire transfer to an
Ivory Ranch account at Chase. The proceeds from the remaining
horse sales were deposited into an account belonging to
petitioner's broker and trainer, Margie Goldstein. The net
income or loss from petitioner's horse-related activities were as
follows: ($8,886), $216, $12,213, and ($17,171) for the taxable
years 1987, 1988, 1989, and 1990, respectively.
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