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petitioners' activity, we find that petitioners engaged in their
Arabian horse activity for profit in the years in issue. Our
holding should not be taken to mean that petitioners would
prevail in any later year without further changes in their
operating methods or results.
C. Whether Petitioners Are Liable for the Penalty Under Section
6662 for Substantial Understatement
Respondent determined that petitioners are liable for the
accuracy-related penalty for substantial understatement for 1994,
1995, and 1996 under section 6662.
Based on our holding that petitioners operated their Arabian
horse activity for profit, petitioners are not liable for the
accuracy-related penalty under section 6662.
Decision will be entered
under Rule 155.
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