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horses. Petitioner did not maintain a separate bank account for
the horse activity.
Petitioners’ Returns and Respondent’s Determinations
Respondent determined from petitioners’ original tax returns
deficiencies of $17,091 and $17,867 for 1997 and 1998,
respectively. Petitioners claimed losses from the horse activity
of $21,823 and $16,891 on amended returns for 1997 and 1998,
respectively. Respondent did not process the amended returns for
1997 and 1998.
OPINION
I. Petitioners’ Horse Activity
Section 183(a) provides generally that, if an activity is
not engaged in for profit, no deduction attributable to such
activity shall be allowed except as provided in section 183(b).
Section 183(c) defines an “activity not engaged in for profit” as
“any activity other than one with respect to which deductions are
allowable for the taxable year under section 162 or under
paragraph (1) or (2) of section 212.”
For a deduction to be allowed under section 162 or 212(1) or
(2), a taxpayer must establish that he or she engaged in the
activity with an actual and honest objective of making an
economic profit independent of tax savings. Evans v.
Commissioner, 908 F.2d 369 (8th Cir. 1990), revg. T.C. Memo.
1988-468; Antonides v. Commissioner, 91 T.C. 686, 693-694 (1988),
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