Osteen v. Comr. of IRS

RONEY, Senior Circuit Judge:

Harry and Gail Osteen (taxpayers) appeal the United States Tax Court’s decision disallowing certain tax deductions attributable to their farming and horse breeding operation on the grounds that this activity was not engaged in for profit and assessing tax deficiencies and penalties for a substantial tax understatement.

We hold that the Tax Court’s factual findings that the Osteens lacked a profit objective are not clearly erroneous and affirm its decision on that issue. We reverse the Tax Court, however, on its assessment of the understatement penalty because there…