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that would indicate that he carried on the activity in a
businesslike manner. A taxpayer is required to maintain records
sufficient to substantiate deductions that he claims on his tax
return. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs.
Petitioner did not file tax returns for the years in issue, nor
did he seek the advice of an accountant or bookkeeper to maintain
books or records.4
Petitioner commingled the financial affairs of the horse
breeding activity with his personal finances. He paid all the
expenses of the horse activity from his personal account and
maintained no separate financial accounts for the horse activity.
The commingling of funds is an indication that the activity is a
hobby rather than a business for profit. See Ballich v.
Commissioner, T.C. Memo. 1978-497.
To the extent petitioner maintained records of his business
activity, the records were disorganized. He placed canceled
checks and receipts from his horse breeding activity in a box or
in Ziploc bags. Petitioner would store the box or bags in his
4 When this case was first called for trial at a prior
session of this Court, petitioner requested a continuance so that
he could prepare returns for the years in issue. Petitioner’s
request was granted, and the case was scheduled on the next
calendar. One week before trial, petitioner submitted Federal
income tax returns to respondent. Then, at trial, petitioner
requested another continuance in order to adjust the farm
expenses claimed. The request for continuance was denied, and
the trial was held at a date later in the session.
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