T.C. Memo. 2002-310
UNITED STATES TAX COURT
JOYCE E. HASTINGS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6565-99. Filed December 23, 2002.
R determined a deficiency for P’s 1993 taxable
year. Using the bank deposits method, R reconstructed
P’s taxable income for 1993 and determined that P had
unreported income from her sole proprietorship.
P operated a horse activity in 1993. Over a
number of years, P incurred substantial losses in such
activity. In no year did the activity make a profit.
P deducted losses sustained in the horse activity. R
disallowed these deductions on the ground that the
horse activity was not engaged in for profit within the
meaning of sec. 183, I.R.C.
Held: P had unreported taxable income from her
sole proprietorship.
Held, further, based on all the facts and
circumstances, the horse activity was an activity not
engaged in for profit within the meaning of sec. 183,
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