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Petitioners owned broodmares Brigitta La Brisa and Vendalita and
expected them to produce foals. Thus, they reasonably expected
that owning Brigitta La Brisa and Vendalita would lead to their
owning foals.
Respondent also contends that petitioners should not include
the value of HB Canadian Dsign, a horse they bought in 1997, in
their estimate of appreciation from their horses in the years in
issue. Respondent further contends that petitioners failed to
include the foal rights from Brigitta La Brisa, Vendalita, and
That’s Amore in their acquisition costs for those horses and that
the value of the foal rights reduces petitioners’ anticipated
appreciation. We agree with respondent on both of these points,
and we have corrected for it in our analysis.
Petitioners’ horses had appreciated by $107,800 as of their
1998 appraisal. This generally corroborates petitioners’
expectation before and during the years in issue that the value
of petitioners’ horses would increase substantially.
b. Appreciation in Petitioners’ Residence and Farm
Improvements
Petitioners contend that we should consider appreciation in
their farm property in applying this factor.
Truitt estimated that petitioners’ farm improvements (i.e.,
the barn, stable, and arena) as of December 21, 1998, were worth
$47,000. Petitioners’ cost of the improvements was about
$23,000. Thus, Truitt’s testimony supports a finding that
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