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Stachowski Farms a $7,125 or 15-percent commission. Petitioner
paid commissions totaling 55 percent on the sale of Pro Gato.
Petitioner maintained a separate checking account for
Arabian Crossings, and he initially testified that the account
was not used for personal expenses. However, checks were written
for personal expenses. For instance, petitioner used the Arabian
Crossings’ checking account on several occasions to send checks
totaling $250 to his niece on her birthday, to pay for a personal
trip to Las Vegas, and to pay veterinarian bills for a swan that
he kept on his farm. On the other hand, petitioner would pay
Stachowski Farms9 with his Visa credit card and then pay his Visa
bills from his personal checking account.
Petitioner asserts that he promoted his Arabians by
exhibiting them at shows and competitive events. An examination
of petitioner’s Federal income tax returns for the years in issue
indicates that petitioner deducted $31,42910 in show costs and
expenses11 and reported $10,32712 in gross receipts from prize
9Petitioner paid Stachowski Farms to board and breed some of
his horses, and occasionally Stachowski Farms acted as agent for
petitioner on the sale of some horses.
10During 1993, 1994, and 1995, petitioner deducted $10,609,
$6,355, and $14,465, respectively, as show costs and expenses.
11Petitioner testified that show costs consist of entry
fees, transporting horses to shows, and maintenance of the horses
at the shows.
12Petitioner reported gross receipts for each year of
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