James J. Lencke and Janene B. Lencke - Page 4

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          considered entering into other types of activities, such as a               
          craft activity, petitioners chose the model railroad activity               
          because they believed it would be a feasible activity for them to           
          pursue given Mr. Lencke's extensive model railroad knowledge and            
          his physical limitations.3                                                  
               Prior to forming Red Caboose, petitioners had a retail                 
          merchant certificate for one of their former activities, a craft            
          activity called Kiln Classics.  In early 1990, they attempted to            
          have the name Red Caboose substituted for the name Kiln Classics            
          on their retail merchant certificate.  However, the name was not            
          changed by the State of Indiana until several years later.                  
          Petitioners are not zoned to conduct a retail business in their             
          home.                                                                       
               During 1990, after petitioners had selected Red Caboose as             
          the activity they would conduct, they asked various suppliers               
          whether they would sell model railroad merchandise to them at               
          wholesale prices.  However, the suppliers refused to do so until            
          sometime in 1991.  Petitioners also contacted credit card                   
          companies, Visa and MasterCard, to discuss the possibility of Red           
          Caboose accepting their credit cards for its model railroad                 


          3  During the years in issue, Mr. Lencke suffered from                      
          glaucoma and diabetes, and previously he had had open heart                 
          surgery.  In addition, he is deaf in one ear, completely blind in           
          one eye and partially blind in the other eye, and must keep one             
          of his legs in a cast.  Thus, Mrs. Lencke, along with Mr.                   
          Lencke's brother, does most of the physical work involved in the            
          operation of Red Caboose, and Mr. Lencke does most of the                   
          paperwork.                                                                  




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