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Petitioners reported the following adjusted gross income
(AGI):
Year AGI
1991 $343,212
1992 235,390
1993 181,237
1994 290,909
1995 293,567
1996 785,116
1997 157,006
1998 245,474
After excluding the losses (and ordinary income) reported by the
horse activity, petitioners’ “readjusted” AGI is as follows:
Year Readjusted AGI
1991 $490,330
1992 601,740
1993 609,184
1994 664,603
1995 665,421
1996 771,413
1997 612,630
1998 682,525
From 1991 through 1998, petitioners’ readjusted AGI averaged
$635,981.
G. Petitioners “Attempts” To Cut Costs
During the years in issue, petitioners spoke with Nicole
about cutting the horse activity’s costs and increasing its
income. Petitioners, however, only discussed with Nicole the
fact that the horse activity was losing money; petitioners never
informed Nicole of the amount of the losses (which totaled
hundreds of thousands of dollars).
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