Timothy Thomas and Janice Kathleen Kuberski - Page 2




                                        - 2 -                                         
                                                  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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