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Quarter Horses; Cutting Horses
A cutting horse is a quarter horse that is trained to work
with cattle. Cutting horses and their riders compete in
competitions for which prize money is awarded. Quarter horses
may be bred and their offspring sold. Stallions may be stood and
a stud fee charged. Fees may be charged for training quarter
horses to be cutting horses. Petitioner bred no horses at the
Arkansas ranch. From 1986 through 1995 petitioners reported no
stud fees on their income tax returns. During 1992 and 1993,
petitioner employed Scott Brewer (Brewer) as a trainer.
Petitioner assisted with the training and performed some manual
labor on the Arkansas ranch. During 1992, petitioner allowed
Brewer to train outside horses on the Arkansas ranch. Petitioner
billed for that service but kept only $150 out of $6,142 billed,
the remainder going to Brewer. Petitioners reported no income
from training for 1993.
Competitions
During 1992 and 1993, Brewer rode as a professional on
petitioner’s horses at cutting horse competitions. Petitioner
paid him 50 percent of his winnings net of entry fees. During
those years, petitioner rode in such competitions as an amateur
or nonprofessional. In those categories, petitioner also could
earn prize money. Petitioner has competed in all the major
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Last modified: May 25, 2011