Judith A. Sanders-Castro - Page 6

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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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Last modified: May 25, 2011