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for the years in issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
After concessions,1 the issues for decision are: (1)
Whether petitioners’ horse activity was an activity engaged in
for profit; and (2) whether petitioners are liable for penalties
pursuant to section 6662 for negligence.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts, the supplemental stipulation of facts,
the stipulation of facts with respect to subsequent years, the
stipulation of settled issues, and the attached exhibits are
incorporated herein by this reference. At the time they filed
the petition, Victor Prieto (Dr. Prieto) and Marion Prieto (Mrs.
Prieto) resided in San Mateo, California.
I. Dr. Prieto’s Medical Practice
Dr. Prieto is an orthopedic surgeon. Since 1984, Dr. Prieto
has been in private practice. In 1984, the partnership of
Jensen, Watson & Light (JWL) hired him at a salary of $65,000 per
year. In 1986, Dr. Prieto made partner at JWL. At this time,
his salary increased to between $130,000 and $150,000 per year.
Since 1988, Dr. Prieto has run his own successful medical
practice in San Francisco, California. Mrs. Prieto also worked
in her husband’s medical practice. She spends a considerable
1 Respondent concedes that sec. 469 is not applicable.
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