Barry S. and Yvonne C. Hillman - Page 16

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          Ashley’s difficulties or after her disposition.  In sum,                     
          petitioners claimed a business plan focused on breeding, but in              
          the 6 years they have engaged in this activity, they have not                
          obtained a single foal or breeding fee.                                      
               Other unbusinesslike conduct abounds.  Petitioners did not              
          allocate the costs of feed, bedding, and stable help between                 
          horses claimed as part of the show horse activity and those not              
          claimed.  Similarly, they treated all amounts paid to trainers as            
          a business cost, although the testimony revealed that these                  
          trainers in part provided instruction to petitioners’ daughter               
          regarding how to show horses.  Dr. Hillman could not recall                  
          whether, and there is no evidence that, they issued Forms W-2 or             
          1099 to the show horse activity’s workers; by contrast, such                 
          formalities were observed in the conduct of Dr. Hillman’s medical            
          practice.  Likewise, petitioners’ accountant was provided the                
          complete records of the medical practice; he received only year-             
          end compilations with respect to the show horse activity.                    
               The evidence demonstrates that the records maintained by                
          petitioners with respect to the activity were neither accurate               
          nor complete.  Their intermingling of the expenses allocable to              
          nonbusiness horses and their daughter’s instruction with                     
          ostensible business expenses has already been noted.  With a few             
          exceptions, prize money was not recorded or reported.                        
          Petitioners claimed expenses for horse shows totaling $12,398 on             

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