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From 1986 through 1997, petitioner reported the following
income from the sale of horses on Form 4797:5
Previously
Gross Sales Allowed
Year Price Depreciation Cost1 Gain/Loss2
1986 $10,000 $3,150 ($10,500) $2,650
1986 3,000 -0- (3,000) -0-
1988 25,000 11,000 (25,000) 11,000
1988 42,000 -0- (26,500) 15,500
1989 2,500 -0- -0- 2,500
1989 5,000 2,898 (3,216) 4,682
1989 36,986 70,399 (118,710) (11,325)
19894 15,000 42,250 (50,000) 7,250
1990 1,500 6,375 (8,500) (625)
1990-1991 3,000 -0- -0- 33,000
1991 3,480 6,300 (7,000) 2,780
1992 54,500 1,250 (32,125) 23,625
1993 15,000 11,900 (17,000) 9,900
1994 2,500 -0- -0- 2,500
1997 50,000 1,275 (5,025) 46,250
Total 269,466 156,797 (306,576) 119,687
1Includes petitioner’s cost or other basis, plus expense of
sale. 2Petitioner’s gains and losses were determined by adding the
gross sales price and depreciation and then subtracting petitioner’s
cost or other basis and selling cost.
3The sale was reported on the installment method. Accordingly,
$800 was recognized in 1990 and $2,200 was recognized in 1991.
4The horses that petitioner sold after 1989 were bred by him.
For 1992, $29,625 of the $32,125 in cost reported by
petitioner is commission paid on the sale of three horses. Mr.
Dahart was paid $22,500 in commission on those three sales.
5For the years in issue, petitioner reported the sale of
horses on part I of Form 4797, Gains and Losses From Sales or
Exchanges of Assets in a Trade or Business and Involuntary
Conversion. The instructions for Form 4797 for those years
provide the following: Sec. 1231 transactions include “Sales or
exchanges of cattle and horses, regardless of age, used in a
trade or business by the taxpayer for draft, breeding, dairy, or
sporting purposes and held for 24 months or more from acquisition
date.”
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