Kenneth E. Perry and Mary A. Hofer - Page 9

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             County property and intended to plant corn on 15 to 18                   
             acres of their Montgomery County property.                               

             Horse Acquisitions, Transactions, and Related Facts                      
                  Petitioners acquired, bred, boarded, and sold numerous              
             horses during the years in issue.  These included Tennessee              
             Walking Horses, thoroughbreds, and one Morgan.  To avoid                 
             confusion, we discuss each breed separately.                             

             Tennessee Walking Horses                                                 
                  On June 28, 1986, petitioners purchased a 12-year-old               
             registered Tennessee Walking Horse stallion named Copy's                 
             Big Shot S (Big Shot) from Mr. Adkins for $1,500.  At the                
             time of purchase, petitioners intended to use Big Shot as                
             a breeding stallion.  Although Big Shot suffered from a                  
             bronchial condition, petitioners believed that $1,500                    
             was a favorable price given the horse's bloodline and                    
             "confirmation".  Big Shot sired a total of eight foals                   
             for petitioners before his death in 1992.                                
                  On October 15, 1987, petitioners purchased a 1-year-                
             old Tennessee Walking Horse mare named Copy's Sugar Plum                 
             (Sugar Plum) for $300.  At the time of purchase,                         
             petitioners intended to use Sugar Plum as a broodmare.                   
             Sugar Plum produced a total of five foals for petitioners                
             prior to the time of trial.  One of these foals was killed               
             in 1991 after suffering a broken leg.  Petitioners sold                  




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