Michael G. Bunney - Page 13

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          taxpayer conducted the activity for profit.  Engdahl v.                     
          Commissioner, 72 T.C. 659, 666-667 (1979); sec. 1.183-2(b)(1),              
          Income Tax Regs.                                                            
               Petitioner did not maintain accurate and complete books and            
          records for M&S.  Petitioner testified that it was not his                  
          practice to use bills of sale or purchase agreements when horses            
          changed ownership.  The documents that petitioner provided as               
          bills of sale were computer-generated, and petitioner admitted to           
          printing them from his computer hard drive in preparation for               
          trial.  Petitioner testified that it was not the general practice           
          in the industry to provide bills of sale and that the important             
          documents were the registration document and transfer report.  At           
          the time of trial, however, petitioner was unable to provide                
          registration documents for any horse that he owned, and he did              
          not have copies of transfer reports for any horses that he                  
          purchased or sold during the years in issue.  Petitioner did not            
          maintain records of the breeding of any mares.                              
               The materials that petitioner provided as evidence of his              
          advertising were also computer-generated and were printed in                
          preparation for trial.  Petitioner provided no evidence of                  
          original advertisements used by M&S.  Petitioner had no record of           
          correspondence from other persons.  The correspondence he                   
          provided was also computer-generated and was prepared for trial.            

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