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horse racing activity, but petitioner, who was not otherwise
employed during 1994, was involved in the activity on a daily
basis. Petitioners hired a neighbor who assisted petitioner in
feeding and otherwise caring for petitioners’ horses. They paid
the neighbor $2,250 during 1994.
Petitioners did not maintain formal books of account for
their horse racing activity. Many of the expenses of the
activity were paid from their personal joint checking account;
other expenses were paid in cash. Cash expenditures were
sometimes noted on slips of paper. They kept numerous receipts
evidencing the purchase of feed, hay, and various supplies from a
variety of vendors. At least one of the race tracks provided
petitioners with a summary of the earnings generated and expenses
incurred on a horse-by-horse basis at the race track. Veterinary
and boarding fees are reflected on various summaries provided by
the farms where petitioners’ horses were boarded.
Petitioners’ 1994 Federal income tax return was prepared by
a professional return preparer. Petitioners reported items
attributable to their horse racing activity on a Schedule F
included with that return. On that schedule, petitioners
reported gross income of $300.26 from “cooperative distributions”
and a “Federal and state gasoline or fuel tax credit or refund”.
The following deductions (amounts are rounded) are claimed:
Description Amount
Advertising $ 59
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Last modified: May 25, 2011