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Addition to Tax
Year Deficiency Sec. 6651(a)(1)
1994 $25,014 $5,628.38
1995 31,785 –-
1996 20,543 –-
1998 19,554 --
The issue for decision is whether petitioners are entitled to
deduct losses claimed on their Schedule C, Profit or Loss From
Business, for Caduceus Thoroughbreds, a horse breeding and racing
operation. Respondent determined that petitioners’ horse
activity was not an activity engaged in for profit within the
meaning of section 183. Unless otherwise indicated, all section
references are to the Internal Revenue Code in effect for the
years in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
FINDINGS OF FACT
Petitioners were residents of Phoenix, Arizona, at the time
they filed their petition. At all material times, Timothy Thomas
Kuberski (petitioner) was a physician. Petitioners filed joint
Federal income tax returns for 1994 through 1998, reporting
annual combined earnings from employment ranging from
approximately $287,000 to approximately $342,000.
Petitioner has been involved in the thoroughbred horse
industry in Arizona since 1980. Petitioner’s goal was to breed,
raise, and race thoroughbred horses.
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