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Petitioner has never owned a farm or other real estate. She
boards her broodmares and foals at several locations in Oregon
and one location in Arizona.3 Petitioner decides which stallions
will breed with her broodmares. She chooses trainers for her
foals by matching each foal's heritage and aptitude to the
trainers' expertise.
Petitioner budgets 30 hours per week for her Appaloosa
breeding and selling activity and admits that it consumes nearly
all of her personal time. She maintains complete records of her
expenses in a single entry ledger and places all of her receipts
in envelopes categorized by type of expense. The amounts claimed
on her returns were derived directly from these records.
Petitioner has a separate bank account for her horse
breeding and selling activity. The account is in petitioner's
name at a bank other than the bank at which she maintains her
personal account. Petitioner's broodmares are insured.
Although she has enjoyed some success in breeding and
selling Appaloosas, petitioner has never realized a profit during
any taxable year. She attributes this lack of any profits to
problems of the National Appaloosa Horse Club during the 1980's
and more recent setbacks with her own broodmares. Petitioner
does not ride Appaloosas for recreational purposes.
On Schedules C attached to her 1994, 1995, and 1996 Federal
income tax returns, petitioner reported the following amounts:
3 One of petitioner's trainers, Rusty Hadden, testified
that one of the benefits of training horses in Arizona is the
opportunity to show the horses throughout the year.
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Last modified: May 25, 2011