- 37 -
ity for those years.27
Petitioner claims that he expected the horses that he
acquired to appreciate in value after he trained them. In
support of that claim, petitioner points to the fact that during
1995 petitioner and Ms. Lyman sold Ziggy for $30,000 one month
after they acquired it for $10,000. We do not take issue with
the proposition that a particular horse, depending on its breed,
training, and other facts and circumstances, may appreciate in
value.28 However, the record contains no reliable evidence of
the appreciation, if any, in the value of the horses that peti-
tioner acquired during the years at issue or thereafter. Peti-
tioner did not at any time retain the services of anyone to
appraise the fair market value of his horses. The only evidence
in the record relating to the value of petitioner's horses is
petitioner's own testimony as to the value of Zack and Bunny and
Ms. Lyman's testimony as to the value of Gator and Bunny.29 With
27 In his returns for 1989, 1990, and 1991, petitioner reported
taxable income, excluding the losses from his horse activity and
his cattle activity, of $92,145, $119,892, and $198,722, respec-
tively, and the parties agree that taxable income for those
years, excluding such losses, should be increased by $49,376,
$17,882, and $7,733, respectively.
28 On the record before us, we find that Ziggy did not materi-
ally appreciate in value, if it appreciated at all, during the
period in which petitioner and Ms. Lyman owned that horse until
they sold it one month later. That is because, when they pur-
chased Ziggy, they paid a price (i.e., $10,000) that was substan-
tially below its fair market value.
29 Ms. Lyman testified that, as of the time of the trial, Gator
had a value of about $25,000 and Bunny was expected to have a
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