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Rinehart v. Commissioner, T.C. Memo. 2002-9. Respondent conceded
that if the Court determined the horse breeding activity was
engaged in for profit, then petitioners substantiated the
expenses deducted for the horse breeding activity. Accordingly,
there is no underpayment of tax attributable to the horse
breeding activity and thus no accuracy-related penalty associated
with the horse breeding activity.
With regard to the COD income, we do not believe imposition
of the accuracy-related penalty is appropriate. Ms. Yeager did
not receive a Form 1099 reporting the COD income. She was
unaware of the Form 1099-C until she was contacted by the IRS
during the audit of her 1994, 1995, and 1996 tax years.
Accordingly, we hold the she is not liable for the accuracy-
related penalty attributable to the COD income.
Petitioners failed to present evidence to establish that
they acted with reasonable cause and in good faith with regard to
any of the other issues, including those they conceded.9
Accordingly, we hold that petitioners are liable for the
accuracy-related penalties as to those issues.
In reaching all of our holdings herein, we have considered
all arguments made by the parties, and to the extent not
9 Petitioners make assertions in their briefs regarding
these other issues; however, assertions on brief are not
evidence. Rule 143(b).
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