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two horses. According to petitioner, two of the horse owners
never paid petitioners for boarding and fees; petitioners did not
take legal action and were unsuccessful collecting the debt.
The parties stipulated that the following income, expenses,
and losses from the horse-related activity were reported in
petitioners’ returns for the years 1986 through 1994 and 1996:6
Year Gross Income Expenses Net Loss
1986 $600 $19,900 ($19,300)
1987 1,182 11,055 (9,873)
1988 --- --- (9,032)
1989 --- --- (9,194)
1990 --- --- (12,655)
1991 4,208 13,544 (9,336)
1992 --- --- (15,970)
1993 2,802 13,732 (10,930)
1994 2,000 7,146 (5,146)
1996 15 9,577 (9,562)
The record does not disclose the nature of the various gross
income figures; i.e., whether from stud fees, boarding fees,
sales of offspring, etc. Copies of the various Schedules C were
not exhibited, so we cannot even identify the major expense
groups or whether any cost savings plans were put into effect.
For 1995, petitioners did not file a Schedule C, Profit or
Loss From Business, with respect to the horse-related activity.
According to petitioner, that year the stallions were sent away.
Around 1996, a foal was born to petitioner’s quarter horse mare,
and petitioner is currently training this foal to be a show
horse. According to petitioner, the colt has received “reserved
champion Pacific Coast quarter horse”.
6 For the years 1988, 1989, 1990, and 1992, only the net
losses were provided.
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