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From the time of purchase in 1985 through May of 1995,
approximate total expenditures petitioners incurred and paid in
connection with the timber farm -- as allocated by petitioners
between petitioner's various activities and including
petitioners’ allocation for expenses of traveling to the timber
farm in petitioner's Lear jet (as explained more fully below) but
not including mere book items such as depreciation and recapture
thereof --- are summarized below:
Category of Timber Farm Expenses Amount
Purchase Price of Timber Farm $ 569,000
Cost of Improvements to Land 400,000
Cost of Equipment and Vehicles 625,000
Maintenance and Operating Expenses 1,160,000
Lear Jet Operating Expenses 428,000
Cumulative 1985-May 1995 Expenses $3,182,000
In summary, by May of 1995, the $3,524,000 total estimated
fair market value of the timber located on petitioners' timber
farm, of the land, of the buildings, of improvements to the land
and buildings, and of the equipment and machinery purchased for
use on the timber farm reflected an unrealized profit (before
taxes) of approximately $342,000 over the total $3,182,000 that
petitioner paid over the years to purchase, improve, and maintain
the timber farm.
Tahiti Property
In 1984, petitioners purchased 5.5 acres (consisting of
three adjacent parcels) of oceanfront property on the main island
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