- 8 -
Year Expenses Income Losses
1989 $7,025 -0- $7,025
1990 12,838 $305 12,533
1991 12,994 -0- 12,994
1992 19,667 447 19,220
1993 121,531 -0- 21,531
1994 26,876 -0- 26,876
1995 31,322 -0- 31,322
Totals $132,253 $752 $131,501
1 On her tax return, petitioner reported $21,531 of expenses
and income of $10,402 for a net of $11,129. The parties,
however, stipulated that petitioner had no gross receipts from
the horse activity in 1993. Accordingly, for purposes of our
analysis, we assume that petitioner’s claimed expenses and losses
are the same.
Petitioner did not maintain a separate bank account for her
horse activity, but she did keep separate records for each horse.
In order to distinguish expenditures for her horse activity from
others, she marked an “H” on those checks written for the
activity. In addition, horse activity invoices or bills
underlying each check expenditure were kept separately for each
horse and accumulated and maintained on a monthly basis.
The annual specific records for each horse contained
information regarding pedigree, pictures and information about
the sire and dam, medical history, pictures of the specific
horse, breeding information, medical information, insurance
information, and training records. Petitioner also maintained
numerous specific-topic horse activity files containing such
information and documents as: Forms, horses for sale, health
tips, boarding and training information, equipment information,
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