amounts that his horses won. Although Kuta did not regularly prepare records showing how much each horse earned, in a few of the years before the years in issue, she prepared a summary at the end of the year showing the earnings of each horse.


19
In addition, at the end of each year Kuta prepared summaries from race track statements to ensure that the Forms 1099 issued by the racetracks were accurate. She also used race track statements to ensure that the various expenses charged to petitioner by the tracks, such as jockey fees, were correct.


20
From 1959 to 1989, Kuta prepared disbursement spreadsheets which showed expenses of the horse racing and breeding activity by category. The spreadsheets were usually prepared at the end of the year, from information inpetitioner stated that his horses were easy to sell because he kept lowering the price until they sold, or he would just give them away. Finally, when asked why he continued to sink money into horse racing and breeding, petitioner simply stated "I was determined to get the best horse, and I practically did it, but I'm running out of it, time."

IV. Petitioners' Income Tax Returns

31
Petitioners reported the horse racing and breeding activity on their joint federal income tax returns each year from 1957 through the years in issue. The following chart shows the amounts of gross receipts, expenses, and losses that petitioners reported on Schedules C from 1957 to 1993:


32
Year         Gross receipts       