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During 1986 and 1987, the 2 years that she raced, Bella Joya
won a total of $42,000 in purses. The total cost of training and
boarding Bella Joya during those years was $40,000. Petitioners
used the $2,000 in net winnings from Bella Joya to breed another
mare.
During 1987, Mrs. Phillips developed an angina condition,
which was treated by cardiac catheterization and from which her
recuperation took approximately 6 months and caused her to reduce
her level of activities. During 1988, Mrs. Phillips developed
acute cholecystitis, which was treated by surgery to remove her
gall bladder and from which her recuperation lasted approximately
4 months and caused her to reduce her level of activities.
During 1988, Mr. Phillips lost his job in Louisiana. He
obtained a position in Virginia and moved there at the end of
1988. Subsequently, petitioners moved their horse activity from
Louisiana to Virginia during 1988 and 1989. Petitioners chose
their current location in Stuart, Virginia, because they believed
that they could retire there with their horse farm.
On October 3, 1988, petitioners filed for bankruptcy under
chapter 13 of the U.S. Bankruptcy Code in the U.S. Bankruptcy
Court for the Western District of Louisiana in order to protect
and to maintain their investment in their horse activity.
Pursuant to bankruptcy court order, petitioners made monthly
payments of $2,000 for 43 months and, then, monthly payments of
$1,600 for 17 months. Petitioners' bankruptcy plan included the
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