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From 1979 until 1990, petitioners owned and operated Machado
Trucking, Inc. (Machado Trucking), a trucking company that
transported cargo throughout California. Petitioners each owned
50 percent of the outstanding shares of stock in Machado
Trucking.
1980-84
In 1980, petitioners began, as informal partners, to
purchase, breed, and race horses. Prior thereto, petitioners had
little involvement with or experience in breeding and racing
horses. Joseph became interested in breeding and racing horses
through gambling on horses, and Robert became interested in
breeding and racing horses through a college horseback riding
class and through part-time employment for a horse trainer.
With respect to their horse breeding activity, petitioners'
initial stated intention was to purchase broodmares, to breed the
broodmares with stallions owned by others, and then to sell the
foals as potential racehorses.
With respect to their horse racing activity, petitioners'
initial stated intention was to purchase experienced racehorses
and to race the horses throughout California.
Petitioners treated their horse breeding and their horse
racing activities as two separate activities. When petitioners
began their horse breeding and horse racing activities,
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Last modified: May 25, 2011