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objective of making a profit within the meaning of section 183;
if so, (2) whether petitioners are entitled to a depreciation
deduction for their barn; (3) whether petitioners realized a
capital gain in the amount of $2,000 in 1993; and (4) whether
petitioners are liable for the accuracy-related penalty pursuant
to section 6662(a).2
Background
As a preliminary matter, both parties raised relevancy
objections to certain exhibits. Rule 401 of the Federal Rules of
Evidence, applicable to this Court pursuant to Rule 143 and
section 7453, defines relevant evidence as “evidence having any
tendency to make the existence of any fact that is of consequence
to the determination of the action more probable or less probable
than it would be without the evidence.” Upon reviewing the
exhibits in question, we find they are relevant within the
meaning of rule 401 of the Federal Rules of Evidence. The
objections are overruled.
Some of the facts have been stipulated, and they are so
found. The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time they filed
their petition, petitioners resided in Whittier, California.
Marjorie Pitts (petitioner) acquired her first horse and
started training horses in 1958. She started showing horses
professionally in 1960 for an executive on the east coast. Two
2 Petitioners raised the issue of innocent spouse (as to
one or both) in their petition but conceded the matter at trial.
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