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Profit or Loss from Business, in 1997, 1998, and 1999,
respectively.2
Petitioner’s income tax returns for the years in issue were
received by the Internal Revenue Service on the following dates:
(1) Petitioner’s 1997 tax return was received on July 7, 1999,
(2) petitioner’s 1998 tax return was received on August 23, 2000,
and (3) petitioner’s 1999 tax return was received on December 26,
2000.
By notice of deficiency dated August 30, 2002, respondent
determined that petitioner’s horse activity was not engaged in
for profit, and the corresponding deductions for the Schedule C
losses from this activity were disallowed.
Discussion
I. Deductibility of Losses
In general, a taxpayer bears the burden of proving his
entitlement to business expense deductions. Rule 142(a); Welch
v. Helvering, 290 U.S. 111, 115 (1933); Burrus v. Commissioner,
T.C. Memo. 2003-285. Section 7491(a) does not apply in this case
to shift the burden of proof to respondent. Petitioner has
neither alleged that section 7491 applies nor established his
compliance with the requirements of section 7491(a)(2)(A) and (B)
2 The total amounts of losses deducted on petitioner’s tax
returns for 1997, 1998, and 1999 actually were $56,733, $44,265,
and $30,910, respectively. Petitioner’s Schedule C losses from
his horse activity were offset by Schedule C income from his law
practice in the amounts of $3,088 in 1997 and $11,851 in 1999.
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