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that failed to produce a foal capable of recouping the types of
losses she incurred over the years. She also continued to race
at tracks that she testified did not offer the chance for high
payouts.
Petitioner explains away her substantial losses by arguing
there were several unforeseen events that negatively affected her
activities. These events include: (1) The death of one of her
broodmares; (2) barren broodmares; (3) poor performance of racing
thoroughbreds; and (4) negative economic conditions. We are not
convinced that any of these circumstances are the type that
should have caught petitioner by surprise.
Petitioner next urges the Court to ignore losses she
incurred before 1991 because the Internal Revenue Service (IRS)
examined her income tax return for 1991 and did not disallow the
deductions she claimed for her thoroughbred horse breeding and
racing activities. In effect, petitioner is asking us to ignore
the pre-1991 losses because the IRS previously “approved” these
losses. We decline petitioner’s invitation because 1991 is not
the year at issue in this case. The facts and circumstances in
1991 are different from those in 1996. Furthermore, even if it
were the same year, a trial before this Court in a deficiency
case is a proceeding de novo. We are not bound by the findings
of an IRS audit. Casey v. Commissioner, 38 T.C. 357 (1962).
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