- 7 -
1994 -0- 26,876 26,876
1995 -0- 31,322 31,322
Totals $11,154 $132,253 $121,099
In 1993, petitioner received $9,774 for pasturing horses
owned by a third party and $627.50 from a horse show.
Petitioner did not maintain a separate bank account for her
horse activity. Petitioner marked an “H” on each check written
for a horse expenditure. Invoices or bills underlying each check
expenditure were kept separately for each horse and accumulated
and maintained on a monthly basis.
Petitioner maintains a trailer on the Julian, California,
property that serves as her residence when she is tending the
horses there.
OPINION
I. Unreported Income
The income of a sole proprietorship must be included in
calculating the income and tax liabilities of the individual
owning the business. Sec. 61(a)(2). The net profit or loss of
such a business is generally computed on Schedule C, Profit or
Loss From Business.
Taxpayers are required to maintain records sufficient to
establish the existence and amount of all items reported on the
tax return, including both income and deductions therefrom. Sec.
6001; sec. 1.6001-1(a), Income Tax Regs. In the absence of books
and records adequate to determine a taxpayer's proper tax
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