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world. Zane has not won more than nominal amounts showing dogs,
and he did not earn any income from judging during the years at
issue.
Zane did not have a written business plan for his dog
breeding activity. He did not keep a separate checking account
for his dog breeding activity. When he wrote a check, he noted
the purpose of the expense. At the end of the year, Zane
summarized the expenses for his C.P.A. for purposes of preparing
his returns. Zane spent approximately 10 to 20 hours each week
on the dog breeding activity and was showing one or two dogs
regularly and three or four dogs less often.
Zane had two Staffordshire Bull Terriers living with him in
New York from 1996 through 2003, and his other dogs lived with
professional handlers. In addition, Zane coowned some dogs that
lived with his coowners. Zane had no income from the dog
breeding activity in any of the years 1996, 1997, 1998, 1999, and
2000. Zane’s 1997 Schedule C, Profit or Loss From Business,
reflected no income and $52,683 in expenses. Zane’s Schedules F
attached to his other returns were entitled “Cattle Crops–-Dog
Breeding” and for 2004 included the term “Organic Dairy Milk”.
Some of them reflected income, but the source was not specified.
The following table shows the losses Zane claimed for the
dog breeding activity for the years 1997 through 2004:
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Last modified: March 27, 2008