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Federation (collectively, associations). She also in that year
hired a trainer. The record does not establish whether
petitioner has ever been an active participant in any of the
associations or the purpose of this trainer.
In 1988, petitioner purchased a horse named Feyras Raehele
for $11,000. Feyras Raehele was the first horse that petitioner
ever owned, and petitioner showed and bred this horse during
1988. Petitioner also for 1988 began attaching to her Federal
income tax return a Schedule C, Profit or Loss From Business, on
which she deducted expenses related to Feyras Raehele. (See the
appendix for a list of the specific expenses that petitioner
claimed as deductions for 1988 and for each year thereafter until
2002. Other than the names of these expenses, which for the most
part are the names given the expenses by petitioner on her
Federal income tax returns, the record contains little to no
information on the specifics of the expenses.) She reported on
the 1988 Schedule C that she had a business named “Falling Water
Arabians”, that its “principal business” was “Equine Investment”,
and that its address was that of the Falling Water Way property.
She also reported on the 1988 Schedule C that this business had
realized $95 of gross income during that year and that she was
entitled to deduct with respect thereto $27,782 of expenses
(including $7,195 of depreciation on $35,975 of assets inclusive
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