- 14 - Respondent points out that petitioners did not have a detailed written budget or written business plan and that they paid most of the expenses for their horse activity with personal funds. Petitioners kept complete and accurate records on their personal computer. They could obtain reports from their computer including reports for each horse. They could identify the amount of their horse income and expenses in their personal checking account. See Engdahl v. Commissioner, supra at 667 (one checking account for horse activity, a medical practice, and personal matters). Respondent points out that petitioners’ horse activity books and records were very different from those in the corporation which employed Mr. Strickland. We think those differences are understandable, among other reasons, because the horse activity was in the early stages during the years in issue. It is reasonable for a new activity, with very little cash flow or income, to use personal funds. Petitioners had a business plan and pursued it consistently, even though it was not written. See Phillips v. Commissioner, T.C. Memo. 1997-128 (written financial plan not required for 32-horse farm where business plan evidenced by action). Petitioners conducted their horse activity in a businesslike manner. Mr. Strickland built as much of the facilities as possible, and petitioner provided medical and training services to reduce their expenses. TheyPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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