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Arabian horses on Schedule C, Profit or Loss From Business, under
the business name “Louis J. Novak”. For the years 1987 through
1997, petitioner reported income and deductions relating to his
Arabian horse activity on Schedule C under the business name
“Arabian Crossings Farm” or “Arabian Crossings”.
During the years 1986 through 1997, petitioner’s horse
activity was reported on Schedule C as having incurred losses as
follows:
Schedule C
Expenses
Gross Cost of Gross Other Than Schedule C
Year Receipts Goods Sold Income Depreciation Depreciation Loss
1986 $32,200 -0- $32,200 $78,976 $39,931 ($86,707)
1987 16,870 -0- 16,870 78,478 42,723 (104,331)
1988 13,644 -0- 13,644 66,657 44,875 (97,888)
1989 8,833 $4,320 4,513 76,485 24,338 (96,310)
1990 12,176 7,390 4,786 90,917 28,379 (114,510)
1991 12,695 6,100 6,595 94,383 29,279 (117,067)
1992 4,309 6,018 (1,709) 52,774 31,760 (86,243)
1993 3,452 5,825 (2,373) 55,588 27,711 (85,672)
1994 3,250 6,566 (3,316) 49,265 28,039 (80,620)
1995 3,625 13,629 (10,004) 60,003 27,580 (97,587)
1996 3,105 18,877 (15,772) 65,138 24,786 (105,696)
1997 1,688 6,290 (4,602) 1106,068 21,080 (131,750)
Total 115,847 75,015 40,832 874,732 370,481 (1,204,381)
1Petitioner also owed Stachowski Farms approximately $20,000 in unpaid
boarding/training bills as of Dec. 31, 1997.
No sales of horses were included in Schedule C gross
receipts for the years in issue. Reported gross receipts for the
years in issue consisted entirely of prize winnings. It does not
appear that any of the “gross receipts” that petitioner reported
from 1986 through 1992 and 1996 through 1997 included the sale of
horses that he bred. For each of those years, petitioner
reported the sale of horses on Form 4797, Gains and Losses From
Sales or Exchanges of Assets Used in a Trade or Business and
Involuntary Conversions.
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