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Respondent determined deficiencies in petitioners’ Federal
income taxes for the calendar years 1996, 1997, and 1998 of
$7,095, $1,906, and $2,859, respectively. After concessions by
the parties, the sole issue in dispute is whether petitioners are
entitled to compute their taxable income by deducting losses of
their horse-breeding activity for 1996, 1997, and 1998 in the
amounts of $12,138, $11,290, and $10,303, respectively.
Respondent determined that petitioners’ horse-breeding activity
was not an activity engaged in for profit within the meaning of
section 183. We uphold respondent’s determination.
Background
Some of the facts have been stipulated and are so found.
When petitioners filed their petition, they resided in Algodones,
New Mexico.
During the years in issue, petitioner Julius Harrington (Dr.
Harrington) was employed full time as a professor at New Mexico
Highlands University School of Social Work. He holds an
undergraduate degree in sociology, two master’s degrees in social
work, and a doctorate in social work education. Petitioner Mary
Lou Ziter (Dr. Ziter) holds a doctorate in social work and during
1996 was self-employed part time as a family therapist. During
1997 and 1998, Dr. Ziter was retired.
During the years in issue, in addition to teaching full
time, Dr. Harrington spent substantial time engaging in the
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