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Furthermore, the ranch expanded its operation to take advantage
of economies of scale. In 1995, petitioner made the necessary
capital outlays to buy more land about 40 miles south of Flying H
to bring in productive resources like hay pasture and other
resources that were directly related to the cattle program and to
provide a cheaper alternative for wintering his cows.
In an effort to generate new sources of revenue, petitioner
began a big game hunting operation. Respondent concedes that
this program has taken a long time to develop because the ranch
needed to improve its wildlife habitat, allow the game on the
ranch to mature, and adjust the herd distributions. Moreover,
the trophy hunting business is a new industry in the west, and it
takes a long time to produce high quality game and build a
clientele of hunters. Respondent further concedes that the game
hunting program is expected eventually to be a thriving,
profitable aspect of the ranch.
In passing we note that while petitioner did occasionally
use the ranch for recreational hunting, the parties stipulated
that none of the expenses at issue concern petitioners' personal
use. Moreover, petitioner's use of the ranch was no different
from that of other farmers and ranchers who hunt and fish on
their own lands. We find that any element of personal recreation
the petitioner derived from the ranch was merely incidental to
the overall ranching activity. See Hoyle v. Commissioner, supra
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