Harvey J. Davis and Patricia A. Davis - Page 7

                                        - 7 -                                         
          because it had big new barns, more horses, more stallions, and 30           
          or more horses being trained for clients.                                   
               2.   Petitioners’ Plans and Preparation                                
               When they started their horse activity, petitioners chose              
          McDannald to advise them on the training, breeding, and showing             
          of their horses.  McDannald advised petitioners sometime after              
          they started their horse activity that they did not need to buy             
          more land for it.  He told them they should buy hay to feed their           
          horses rather than land on which to grow it.                                
               In 1990, petitioners did not visit or know anyone with an              
          Arabian horse farm which was comparable to their own horse                  
          activity.  The McDannald Arabian horse farm was much larger and             
          not comparable to petitioners’ horse activity because McDannald             
          trained horses but petitioners did not.  Petitioners did not                
          review the financial records of any Arabian horse operators                 
          before starting their own Arabian show horse activity in 1990.              
               Petitioners began to operate their horse activity in 1990.             
          In 1990, petitioner drafted a business plan for 1991 to 1997 for            
          petitioners’ horse activity.  Petitioners’ business plan for the            
          years in issue was to buy inexpensive horses and to try to                  
          increase their value by training and showing them.                          
               The plan analyzed costs to raise and train a horse.                    
          Petitioner estimated that it would cost $6,545 plus labor to                
          breed and raise an Arabian colt for 3 years.  However, petitioner           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011