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of the livestock. There were intermittent sales, through
auctions, of livestock (cattle and sheep), but only during 1992.
Also, there was a 1992 sale of a goat for $35. Petitioners did
not engage in a sustained practice of purchasing, culling, or
selling the livestock.
Petitioners assert that they were limited in the amount of
cash they could infuse into the Pescadero property in order to
make the farming activity profitable, repairing the existing
structures, and building the irrigation system, as well as
attempting to manage and expand the livestock. Petitioners,
however, did not attempt to obtain financing to expand the
farming activity. In that regard, the irrigation system was not
installed until 10 years after the purchase of the Pescadero
property.
Petitioner husband contended that he repaired farm buildings
to "add value and maintain the value of the property so it will
continue to appreciate and be attractive." Petitioners also
initiated a lawsuit against Dell'Oca to protect the value of the
property from any diminution that would result from the alleged
overuse of the water in the reservoir. Petitioners' major focus
was on the possibility that the Pescadero property might
appreciate in value.
Although petitioner husband contended that he wanted to
raise fish in the reservoir as a business activity, he also
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