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The average commission a seller pays on the sale of a horse
is 10 to 15 percent of the sales price. Petitioner paid
commissions of 10 to 15 percent to persons other than Mr. Dahart.
Nevertheless, petitioner paid commissions to Mr. Dahart that were
as high as 50 percent. Petitioner provided no explanation for
the above-average commissions paid to Mr. Dahart. Petitioner
paid Mr. Dahart commissions6 on the following sales:
Year of Sales Percentage of
Sale Horse PriceCommission Sales Price
1990 Dance with Fire $3,000 $1,27542.5%
1992 Pro Gato 47,500 119,000 40.0%
1992 La Quintina 2,000 1,00050.0%
1992 Lucy in Disguise 5,000 2,500 50.0%
57,500 23,775 41.35%
1Petitioner also paid Stachowski Farms a $7,125 (15-percent) commission on
this sale. Combining the commission paid to Mr. Dahart and to Stachowski Farms,
petitioner paid a 55-percent commission on the sale of Pro Gato.
During the years in issue, petitioner owned the following
horses:
Horse
Staleys Mahgelo
Labamba1
Crystal Aere
Marranda
Bint Quintina
New Foundation
Louisville
Morocco Grande
PF Private Reserv2
Apaladin3
1Sold in 1994.
2Sold in 1993.
3Born in 1994.
During the years in issue, petitioner maintained a separate
checking account for his horse activity under the name “Arabian
6Petitioner also began paying Mr. Dahart a salary starting
in 1996.
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