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Net Loss of Net Income of
Tax Year Horse Activity Topping White
1998 $47,123 $200,908
1999 80,735 157,239
2000 206,080 499,908
2001 275,169 322,459
On a consolidated basis, however, petitioner’s overall business
enjoyed a net profit 6 of the first 7 years of the business:
Year Gross Income Cash Expenses Net Income
1998 $253,965 $100,180 $153,785
19991 276,453 199,949 76,504
20001 707,521 413,693 293,828
20011 542,183 494,893 47,290
2002 523,038 485,279 37,759
2003 841,564 495,422 346,142
2004 498,826 506,887 (8,061)
1 Years at issue.
Petitioner is a beneficiary of the Daniel Topping Trust (the
trust) from which she received taxable income from 1998 through
2004. For the years in question, that income consisted of
$14,060 for 1999, $12,053 for 2000, and $11,882 for 2001. For
all of the other years, the amount received from the trust was
under $20,000.
On August 26, 2004, respondent mailed to petitioner a notice
of deficiency asserting deficiencies for the taxable years 1999,
2000, and 2001. The notice contained no determination regarding
the relationship between the horse circuit and the horse
barn/interior design activities. The first two adjustments
shifted the gross income which petitioner reported from her horse
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Last modified: November 10, 2007