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expenses and reported $7525 in income, for a net loss from all
operations of $131,501. She has not shown that her projections
for income were reasonable in relation to her investment.
In the setting of this case, petitioner's actions did not
reflect a profit-seeking objective. Instead, petitioner offset
or sheltered her law practice income by her losses from the horse
activity. It may have been petitioner's intent to pursue her
horse activity in a businesslike manner when her law practice
ceased or declined, but that had not yet occurred as of or during
the years in issue.
Finally, it is obvious that petitioner sought involvement in
horse activity because of her affinity for and background
involving horses. We hold that, for the 1989 through 1992
taxable years, petitioner did not enter into and\or continue the
horse activity with an actual and honest objective of making a
profit.
Petitioner’s income from her law practice--was it
understated? Respondent, based on a bank deposit analysis,
determined that petitioner had unreported income from her law
practice in the amounts of $6,872, $15,499, and $22,410 for 1986,
5 Petitioner had amended her 1994 income tax return to
reflect $20,000 in income from her horse activity. At trial,
however, it was unclear whether petitioner had actually received
the $20,000 in connection with her horse activity. In either
event, petitioner’s comparative figures are similar.
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