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Adjusted
Wages and Horse activity Dog activity Antiques activity gross
Year other income1 income (loss) income (loss) income (loss) income
1987 $76,516 ($12,918) ($1,099) ($11,359) $57,090
1988 78,008 (21,675) (816) 1,945 58,882
1989 92,893 (28,223) 236 9,209 57,430
1990 124,663 (53,037) (316) (7,491) 66,208
1991 141,724 (55,843) N/A (7,126) 81,205
1992 148,169 (70,598) N/A (5,886) 73,434
1993 171,379 (64,886) N/A N/A 81,076
1994 205,580 (66,880) N/A N/A 140,806
1995 159,117 (51,175) N/A N/A 109,309
1996 139,049 (56,853) N/A N/A 92,794
1997 165,083 (60,663) N/A N/A 115,982
1Includes income from all other sources except the horse activity and the
dog breeding and antiques ventures.
Notice of Deficiency
Following an examination of petitioners’ Federal income tax
returns for 1991, 1992, and 1993, respondent issued a notice of
deficiency in which he determined that (1) petitioners’ horse
activity in those years was an activity not engaged in for profit
under section 183 and expenses claimed with respect to the horse
activity were disallowed, except as allowed by section 183(b), (2)
petitioners had failed to report commission income of $28,000,
(3) computational adjustments to petitioners’ itemized deductions
were required because of the preceding adjustments, and (4)
petitioners were liable for the negligence prong of the accuracy-
related penalty under section 6662(a).
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