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in 2000 and did not report any gain as income on her Schedule C
for that year.
Petitioner bred Sarah Air with Jr’s Shado, the same stallion
that produced Skippy and King. Jr’s Shado was owned by T.L.
Seville (Mr. Seville).
Sarah Air foaled Saras Chula Shado (Chula) in May 1999.
Petitioner bred Sarah Air another time with Jr’s Shado,
unsuccessfully, in 1999. Breeding the same pair still another
time yielded a horse named Star in 2001. Chula was sold in 2002
in exchange for $1,250 and training for Star valued at $1,000.
Both Star and Sarah Air were later given away to a friend for
free.4
In 1999, petitioner purchased another mare, Flash,
discovered by Ms. Pruitt at a rodeo. The idea was that
petitioner would buy Flash and pay for training while Ms. Pruitt
would maintain the horse, and the two would split the profits
from Flash’s eventual sale.5 Petitioner purchased Flash for
$3,600, had her trained for about 6 months (at a cost of
3(...continued)
Jan. 23, 1999.
4 Petitioner testified that, at the time of trial, the
transfer of the horses was not yet complete but that she was
incurring no further related expenses and that her friend had
“assumed ownership” of the horses.
5 Despite this 50-percent partnership arrangement,
petitioner claimed 100 percent of the depreciation deductions for
this horse on her 1999 and 2001 tax returns.
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