Harvey J. Davis and Patricia A. Davis - Page 15





                                       - 15 -                                         
               Petitioners’ expert, Diane O’Connor (O’Connor), appraised              
          petitioners’ Arabian horses in April 1998.  At that time,                   
          petitioners had the following amounts of unrealized appreciation            
          in the horses they owned or that were born to horses they owned             
          during the years in issue:                                                  
                    Cash      Foal      Total     1998      1998                      
          Horse        basis  right      cost       Value   Appreciation              
          Pryncz    $200      none      $200      $5,000    $4,800                    
          Prince                                                                      
          Hilal     500       none      500       4,500     4,000                     
          Brigitta                                                                    
          La Brisa   2,000    $3,000    5,000     20,000    15,000                    
          Vendalita   2,000   3,000     5,000     25,000    20,000                    
          Splendante  3,000   none      3,000     28,000    25,000                    
          That’s                                                                      
          Amore     none      6,000     6,000     30,000    24,000                    
          Brilliant    none   none           0    5,000     5,000                     
          Spanish                                                                     
          Ballerina   none    none           0    10,000    10,000                    
               Total                                        107,800                   
                                       OPINION                                        
          A.   Whether Petitioners Operated Their Arabian Show Horse                  
               Breeding Activity for Profit                                           
               The issue for decision is whether petitioners operated their           
          Arabian show horse breeding activity for profit in 1994, 1995,              
          and 1996.                                                                   
               A taxpayer conducts an activity for profit if he or she does           
          so with an actual and honest profit objective.  See Osteen v.               
          Commissioner, 62 F.3d 356, 358 (11th Cir. 1995), affg. in part              
          and revg. on other issues T.C. Memo. 1993-519; Surloff v.                   
          Commissioner, 81 T.C. 210, 233 (1983); Dreicer v. Commissioner,             
          78 T.C. 642, 645 (1982), affd. without opinion 702 F.2d 1205                





Page:  Previous  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  Next

Last modified: May 25, 2011