Otis W. Jordan and Alma F. Jordan - Page 5




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                         Custom hire              1,600                               
                         Horse feed               539                                 
                         Hay                      2,215                               
                         Insurance                818                                 
                         Mortgage interest        1,666                               
                         Other interest           1,495                               
                         Labor hired              2,250                               
                         Boarding                 4,435                               
                         Miscellaneous            1,800                               
                         Repairs/maintenance      2,275                               
                         Supplies                 5,307                               
                         Taxes                    1,892                               
                         Veterinarian             1,070                               
                         Jockey fees              66                                  
                         Legal fees               250                                 
                         License                  25                                  
                         Breeding fees            4,250                               
                         Horse showing            100                                 
                         License                  25                                  
          The deduction for supplies appears to represent amounts spent to            
          build or substantially improve a barn.  The above deductions                
          total $32,137.  For reasons unexplained, on the line designated             
          “Total expenses” on the Schedule F, petitioners entered                     
          $29,495.94.  This amount was apparently used in calculating the             
          reported net farm loss of $29,195.68.                                       
               In the notice of deficiency, respondent disallowed all of              
          the expenses claimed on the Schedule F.                                     
          Discussion                                                                  
               Consistent with the manner in which petitioners filed their            
          1994 return, they contend that the deductions claimed on the                
          Schedule F are allowable as trade or business expenses.                     










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Last modified: May 25, 2011