Stanley M. Kurzet and Anne L. Kurzet - Page 14

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            Petitioners did not submit applications to the State of Oregon                            
            for permission to perform the land excavation relating to                                 
            construction of the water reservoir until 1988, and permission                            
            was not received from the State of Oregon until September of                              
            1990.                                                                                     
                  Further excavations and improvements to the water reservoir                         
            were the primary construction project on which petitioners and                            
            his employees worked in 1989.                                                             
                  Rather than rent the numerous pieces of farm equipment and                          
            machinery needed for the various projects that petitioner and his                         
            employees personally undertook on the timber farm, during the                             
            years before us, petitioner traveled occasionally throughout                              
            Oregon and Washington to auctions of used farm equipment and                              
            machinery in order to acquire used equipment for use on the                               
            timber farm.  Often, at the time of purchase by petitioner, such                          
            equipment was not operational, and petitioner personally and with                         
            his employees would rebuild and restore the equipment.                                    
                  In 1985, petitioner purchased a used fire truck for use in                          
            protecting trees on the timber farm from fire.  Petitioner                                
            purchased used equipment for harvesting, cutting, and baling hay,                         
            and chain saws and other equipment to cut timber.  Petitioner                             
            purchased used machine shop equipment to maintain the machine                             
            shop on the timber farm so that petitioner and his employees                              
            could make, on the property, essentially all repairs to the farm                          






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