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approximately $3,600), and ultimately gave her away at no charge
to a friend in 2004.
Petitioner hired people she considered to be experts to care
for and train the horses. Most of the horses were boarded with
Ms. Pruitt in Texas or with Mr. Seville in Colorado or New
Mexico. Petitioner paid Ms. Pruitt, Mr. Seville, and others to
train and show the horses.
Part of building a horse’s reputation--and thus its
appreciation in value--results from its performance at horse
shows. For example, Sarah Air won numerous riding competitions
during the time petitioner owned her. The shows in which
petitioner entered her horses did not pay prize money. Rather,
the horses would win points for placing in various categories.
None of petitioner’s horses were entered in any competitions in
2001.
Petitioner listed her horse showing and breeding activities
on her Federal income tax returns with the fictitious business
name “Autumn Skies Ranch”, but she never filed a name
registration for that business. She never made business cards or
letterhead. She did not regularly issue Forms 1099 (information
returns) to the professionals she paid to board or train her
horses. She did not regularly enter into written contracts
concerning the care, training, or showing of her horses.
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