Otis W. Jordan and Alma F. Jordan - Page 4

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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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