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Respondent argues that petitioners’ treatment of the horse
activity’s expenditures as business expenditures was negligent or
an intentional disregard of rules or regulations. We conclude
that petitioners reasonably and in good faith relied on their
accountants to determine whether petitioners, as a legal matter,
were entitled to deduct the horse activity’s expenses.7
Accordingly, petitioners are not liable for the accuracy-related
penalties for 1994 and 1995.
In reaching all of our holdings herein, we have considered
all arguments made by the parties, and to the extent not
mentioned above, we find them to be irrelevant or without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
7 Mr. Hurley, the accountant for the horse activity,
specialized in preparing tax returns for people who operated
horse activities. Petitioners gave him all the records prepared
by the horse activity’s bookkeeper and all the relevant facts so
that Mr. Hurley could prepare the tax returns for the horse
activity.
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