J. Michael and Susan Reimer - Page 15




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          I.   Petitioners’ Income And Expenses                                       
               Petitioners do not recall whether their horse breeding                 
          activity ever resulted in any net income.  The following is a               
          summary of petitioners’ gross receipts, expenses, and net losses            
          from their NSA activity and horse breeding activity, as reported            
          on petitioners’ Schedules F for the years 1992-1998:                        

           Year    NSA Activity    Horse Activity      Combined Operations            
                 Gross   Expenses Gross  Expenses  Gross Expenses  Net Gain           
                Receipts         Receipts        Receipts           (Loss)            
           1992  $406    1$202     2$240 $37,813 $646    $38,015   ($37,369)          
           1993    0     31,072     280  22,665       80   23,737 (23,657)            
           1994   4,465  41,365   54,430   38,7388,895   40,103    (31,208)           
           1995   N/A    N/A       0     25,162    0     25,162    (25,162)           
           1996   N/A    N/A      628,29230,903   28,292   30,903 (2,611)             
           1997   N/A    N/A      720,30325,223   20,303   25,223 (4,920)             
           1998 N/A      N/A      832,13036,852   32,130   36,852 (4,722)             
           Total $4,871  $2,639  $85,475 $217,356  $90,346 $219,995  ($129,649)       
          1    Petitioners also claimed cost of goods sold of $1,774.                 
          2    This amount represents “other income, including Federal and State gasoline or fuel tax
               credit or refund.”                                                     
          3    Petitioners also claimed cost of goods sold of $920.                   
          4    Petitioners also claimed cost of goods sold of $4,931.                 
          5    $1,930 of this amount is from “other income”.                          
          6    This amount represents sale of livestock of $12,700, custom hire income of $11,082, and
               “other income” of $4,510.                                              
          7    This amount represents sale of livestock of $3,000, custom hire income of $13,593, and
               “other income” of $3,710.                                              
          8    This amount represents sale of livestock of $15,200 and custom hire income of $16,930.
               Horse breeding activity income received during years 1996              
          through 1998 includes sale of livestock, custom hire income, and            
          other income, including Federal and State gasoline or fuel tax              
          credits or refunds.                                                         
               The following is a table of petitioners’ W-2 income, and               
          Federal income taxes withheld for 1992-1998:                                






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