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annual plans, the general plan is a one-page fill-in-the-blank
form with handwritten responses. Petitioner listed her
objectives as “Breed, Raise, Show to Increase Value, Sell.”
Petitioner listed areas of opportunity for profit as “Selling
Quality Show horses.” Petitioner stated that she hoped to start
making a profit in 7 years. It is not clear from the record when
the general plan was prepared or whether it related to any
specific years.
4. Income and Expenses From Petitioner’s Horse
Activity
After the close of each year, Ms. Pope compiled canceled
checks and credit card receipts and used these to categorize
expenses and prepare profit and loss statements. The profit and
loss statements do not identify the costs specifically connected
with each horse. The profit and loss statements do not indicate
what accounts the checks were drawn on.
Charles E. Wessman (Mr. Wessman), a C.P.A., used the profit
and loss statements to prepare petitioner’s Schedules C, Profit
or Loss From Business. Petitioner’s Schedules C for 1988 through
2003 reflect the following:
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