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Petitioners’ books and records for the years at issue were
adequate to substantiate all expenses claimed on their Federal
income tax returns with respect to their horse activity in those
years.
Petitioners’ Other Activities
Petitioners owned and operated two other alleged
businesses: A dog breeding business and an antiques business.
These ventures generally were not profitable. Petitioners
discontinued the dog breeding operation because they purportedly
believed that the horse activity would be more profitable and
because the owner of a quality stud dog moved out of State. The
antiques operation was discontinued because the shopping mall in
which petitioners had been renting space was leveled for a
freeway and because Mr. McKeever, who refinished some of the
items himself, was beginning to suffer adverse health effects
because of exposure to the refinishing chemicals.
Income Tax Returns
Petitioners timely filed a Form 1040, U.S. Individual
Income Tax Return, for each of the years at issue. Petitioners
reported income and expenses from their horse activity on either
Schedule C, Profit or Loss from Business, or Schedule F, Profit
or Loss From Farming, for the years 1987 through 1997, inclusive.
Losses from the horse activity over the years 1987 through 1997
totaled $542,751.
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