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records evidencing the existence of the business were, somehow,
lost. Petitioners could not remember the prices they charged.
Of the $1,500 monthly rent for the property, petitioners
contend that $1,200 was attributable to the horse farm, with the
remaining $300 accounting for the residence. Petitioners
continued to rent the farm until sometime in 1994. Petitioners
claim to have moved from the farm to an apartment at some point
in 1993 but produce no lease agreement other than that for the
farm residence.
Petitioners claim that their barns were full at times. They
spent a good deal of money in initially repairing the property,
and according to petitioners, bought heavy machinery to
facilitate a horse-boarding business. They reported gross
receipts of only $2,260. Their Schedule C for 1993 lists
expenses of $15,720 in rent,1 only $360 in supplies, and $839 in
utilities.
At trial, petitioners presented a statement by the owner of
the property confirming its rental and rate for the year at
issue, one collection notice for a utility bill against "Victoria
Stables" for $839, a receipt from a local newspaper for
advertising a sale of one of the Hudnalls' quarter horses, and
1On their Schedule C for 1993 petitioners list the $15,720
farm rent on line 20 "RENT OR LEASE--Machinery & Equipment--Other
Business Prop."
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Last modified: May 25, 2011