- 15 - line of credit to finance real estate purchases and to pay income taxes, insurance premiums, and other bills. In a letter dated May 25, 1989, for example, petitioner requested that the bank place $770,000 into his checking account, stating that “The purpose of this loan is the payment of income taxes.” Respondent further contends that, even if the borrowed funds were used in the horse breeding activity, petitioner has not established that the activity was a trade or business. Respondent served petitioner with a request for production of documents pursuant to Rule 72(a)(1) asking petitioner to “provide all documents establishing that the training/breeding of horses was an activity undertaken for profit.” Respondent asserts that petitioner has not provided the requested information. Petitioner counters that he conducted the horse breeding activity in a businesslike manner, including keeping accurate books and records and using professional advisers to assist him. Although petitioner acknowledges that the activity generated “considerable” losses in prior years, he contends that respondent never disallowed the losses. Viewing the facts most favorably to respondent, we conclude there remains a genuine issue as to whether petitioner used the borrowed funds in a trade or business. The affidavits of petitioner and his accountant each assert that “most” of the borrowed funds were used in the horse breeding activity.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 NextLast modified: November 10, 2007