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specialist, a layout designer for a chip set, and a field service
representative. Then, in 1980, he left Digital and started his
own business, Scientific Research Management Corporation (SRMC),
in San Jose, California. SRMC was engaged in the building and
servicing of custom computers. By 1989, although SRMC was begun
without a formal business plan and with little capital, the
company’s annual gross income had reached $2.8 million.
In late 1989 and early 1990, petitioner purchased 282 acres
of unimproved land (parcel 1) in Modoc County, California, for
approximately $80,000. He intended to raise cattle on the
property and hoped, in the future, to change and slow down his
fast-lane lifestyle. Prior to acquiring this land, petitioner’s
experience with farming operations consisted of helping out
occasionally on two dairy farms near where he grew up and
visiting a ranch in New Zealand between five and seven times, for
1 to 2 weeks per visit. Petitioner did not seek any professional
assistance at the time he purchased parcel 1 with regard to
whether the land was suitable for cattle ranching. Petitioner
also did not prepare a formal business plan detailing how a
profit was to be made from the ranching operations. His plan was
to “buy cows, feed cows, sell cows.” However, due in part to
lack of rainfall, petitioner never grazed any cattle on parcel 1,
and he sold the land in June of 1996 for $156,000.
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