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Morley sold a total of five or six horses. The most he received
for a horse was $5,000 plus another horse in return.5
Mr. Morley established a separate bank account and
maintained a general ledger for the horse-breeding activity. He
classified expenses under various categories and provided these
figures on a yearly basis to his C.P.A.
Mr. Morley obtained business cards for the horse-breeding
activity. Additionally, he designed a logo for his farm which he
displayed on materials related to the horse-breeding activity--
banners, jackets, hats, and horse coolers--in order to advertise
the horse-breeding activity (the promotional materials). The
promotional materials were orange and white--matching the colors
of the University of Tennessee.
Mr. Morley maintained extensive books and records on the
horse-breeding activity. He used business documents, including
bills of sale and security agreements, purchase-and-sale
contracts, breeding contracts, and boarding contracts. Mr.
Morley's books and records included "teasing" and breeding
records on the horses, pedigrees for each of the horses, and
veterinarian and health records of the horses. He also kept
other records, including bills, from outside organizations that
trained the horses.
5 The record does not indicate the value of the acquired
horse.
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Last modified: May 25, 2011