Charles H. Butler and Judith K. Butler - Page 6

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            cattle and 60 sheep.  At the time of trial, petitioners                                      
            maintained approximately 22 cattle and 65 sheep.  Petitioners may                            
            also have raised some goats and horses on the Pescadero property                             
            during the years at issue.                                                                   
                  Petitioner husband worked on the Pescadero property after                              
            his regular work hours and on weekends.  He spent, on average,                               
            approximately 10 to 12 hours a day on weekends and about                                     
            2 hours on weeknights.  He repaired the fence around the ranch,                              
            and he maintained and extended, as needed, the irrigation system.                            
            Petitioner husband repaired the buildings, an activity which he                              
            believed was necessary to increase or maintain the value of the                              
            property so it would continue to appreciate and be attractive.                               
                  Petitioner wife spent approximately 60 to 70 hours per week                            
            on the ranch.  She handled daily operations on the Pescadero                                 
            property.  In the mornings, she released the sheep locked up in                              
            the pens, fed the sheep, filled up the watering troughs, and                                 
            ensured that none of the livestock were ill or missing.  She also                            
            checked the structural integrity of the fences.  Petitioner wife                             
            repaired and cleaned out the barns as necessary.  She performed                              
            worming operations on the sheep twice a year.  Shearing in the                               
            spring was not done by petitioners.                                                          
                  At the time of the purchase of the Pescadero property,                                 
            petitioners had two children.  They participated in the 4-H Club                             
            program and helped raise the cattle and turkeys.  The animals                                





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