Barry S. and Yvonne C. Hillman - Page 2

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               Unless otherwise noted, all section references are to the               
          Internal Revenue Code in effect for the years in issue.  All Rule            
          references are to the Tax Court Rules of Practice and Procedure.             
          All dollar amounts are rounded to the nearest dollar.                        
               The issues for decision are: (1) Whether petitioners’                   
          activity relating to the breeding and showing of horses was an               
          activity engaged in for profit.  We hold that it was not.  (2)               
          Whether petitioners are entitled to business mileage deductions              
          over and above the amounts respondent has allowed.  We hold that             
          they are not.  (3) Whether petitioners are liable for accuracy-              
          related penalties under section 6662(a).  We hold that they are.             
                                   FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.  We            
          incorporate by this reference the stipulation of facts and                   
          attached exhibits.                                                           
               At the time of filing the petition, petitioners resided in              
          Lewis Center, Ohio.  Petitioners filed joint tax returns for the             
          years in issue, which were prepared by Barry Adelman, C.P.A.                 
          Horse-Related Activities                                                     
               Petitioners were married in 1969 and have two children, Todd            
          and Denise.  Denise was born in 1974, and she has received                   
          training in showing horses since 1982, when she was 8 years old.             
          During the years in issue, petitioners lived in a residence                  
          situated on 8.5 acres, on which was also located a garage, seven-            

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