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In 1982, petitioners purchased 14 acres of land
approximately 1 mile from their home for $13,000 with the
intention of building a horse farm. Petitioners cleared the land
of trees and constructed a nine-horse barn, sheds, fences, a
driveway, and a well at a total cost of $59,500. In 1992 the
farmland and improvements were appraised at $121,000.
Petitioners began their horse activity during 1983 and
decided to specialize in the breeding and selling of Arabian
horses. At that time, petitioners owned an Arabian horse,
Homestead Wiraza, which they had purchased in 1981 for $3,500.
Mr. Dodge joined several horse associations and attended clinics
and seminars to learn how to show, train, breed, and sell horses.
He also paid several thousand dollars for professional horse
trainers. Petitioners did not, however, consult with any horse
breeders about the best way to minimize expenses and/or run a
profitable horse farm, nor did they follow Mr. Tischer's advice
to prepare a long-term plan for the horse farm.
In 1983, petitioners purchased Canadian Fury for $30,000.
Canadian Fury and Homestead Wiraza were the only broodmares used
in petitioners' horse-breeding activity. Petitioners did not
maintain a stallion for breeding purposes; instead they paid stud
fees to outside breeders. From 1983 through 1996, Canadian Fury
and Homestead Wiraza produced eight foals. No foals were born
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Last modified: May 25, 2011