- 2 -
Respondent determined deficiencies in petitioner’s Federal
income taxes and accuracy-related penalties as follows:
Penalty
Year Deficiency Sec. 6662(a)
1996 $15,457 $3,091.40
1997 9,377 1,875.40
1998 4,100 ---
After concessions by the parties,2 the issues remaining for
decision are:
(1) Whether petitioner is entitled to Schedule C, Profit or
Loss From Business, deductions for the taxable years at issue in
excess of the amounts allowed by respondent in the notice of
deficiency. We hold that she is not.
(2) Whether petitioner’s horse breeding activity was an
activity engaged in for profit within the meaning of section
183(a) for the taxable years at issue. We hold that it was not.
(3) Whether petitioner received unreported income during
2 Respondent concedes that petitioner incurred a capital
loss on the sale of a truck in 1998 in the amount of $1,009 as
claimed by her on Form 4797, Sales of Business Property.
Respondent also concedes the amount realized by petitioner
in 1998 on the sale of a house that she built for sale.
Respondent further concedes that petitioner incurred a long-term
capital loss in 1998 with respect to the sale of this house but
in an amount ($13,910) less than that claimed by petitioner on
her 1998 return ($38,000). However, because of the $3,000
limitation on capital losses in sec. 1211(b), we need not decide
the exact amount of the loss because it will have no tax effect
in 1998, the latest of the taxable years in issue. See sec.
1212(b) regarding capital loss carryovers.
Petitioner concedes that she received unreported interest
income in the amounts of $941, $32, and $1 during 1996, 1997, and
1998, respectively, and that she is entitled to a mortgage
interest deduction for 1998 in the amount of $4,909.
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