Barry S. and Yvonne C. Hillman - Page 23

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               Petitioners’ show horse activity lost substantial sums every            
          year for 6 years, aggregating at nearly $100,000.  Apart from                
          their somewhat vague business plan to “not start out large”,                 
          petitioners have not claimed any specific startup period wherein             
          losses are customary.  Petitioners do assert that they                       
          experienced unforeseen adverse circumstances in the poor health              
          and foaling difficulties encountered with Ashley.  While Ashley’s            
          problems may not have been foreseeable, we think they fall well              
          short of accounting for petitioners’ losses.  Ashley was acquired            
          as a 2-year-old in 1984 and was old enough for breeding in 1986.             
          Dr. Hillman testified that the horse miscarried three times in 4             
          years.  But petitioners owned her for 10 years; they claimed her             
          as part of their show horse activity in only 1 year.  If                     
          petitioners had been engaged in a profit-seeking breeding                    
          activity, we believe they would have acted more promptly to                  
          address the problem of a nonperforming brood mare.  Moreover,                
          there is no evidence that they have acquired a brood mare during             
          2 years subsequent to the years in issue.  We are left both with             
          the impression that the record does not contain a full accounting            
          of petitioners’ experience with Ashley, and the conviction that              
          any losses occasioned by Ashley’s unforeseen problems do not                 
          satisfactorily explain the history of losses in this case.                   
          Petitioners’ failure since 1994 either to acquire a new brood                
          mare or to obtain any breeding fees from their stallions, and                

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