Anthony W. Jorgenson and Florence A. Jorgenson - Page 6




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          of the Chireno ranch.  Mr. Smith did not maintain written records           
          with regard to the number of hours he cared for the Chireno                 
          ranch.  Petitioners compensated Mr. Smith for his services by               
          providing him with part of the bailed hay.  In addition to his              
          work at the Chireno ranch, Mr. Smith worked for a local cable               
          company installing cable and operated a ranch in Nacogdoches.               
          Colorado Ranch                                                              
               In 1983, petitioners purchased 1,200 acres of land, 10 miles           
          east of Guffey, Colorado (Colorado ranch), for $550,000.  The               
          Colorado ranch includes a house and a barn.                                 
               On the Colorado ranch, the growing season lasts only 30 to             
          60 days during a normal year.  The grazing season lasts only 90             
          days.  Because of this short grazing season, the Colorado ranch             
          can only serve as a summer steer or heifer operation.                       
               In 1984, severe rains caused a major flood on the Colorado             
          ranch.  As a result of the flood, the hay meadows and the grasses           
          on the Colorado ranch were severely damaged.  To maintain revenue           
          from the sale of hay and to provide any steers and heifers on the           
          Colorado ranch with fields on which to graze, petitioners had to            
          reestablish the hay meadows and the grasses.                                
               From 1984 to 1993, petitioners participated in a Government-           
          sponsored conservation program to replant the hay meadows and the           
          grasses.  Under the terms of the conservation program,                      
          petitioners could not graze cattle on several sections of the               
          Colorado ranch during the replanting period.  The replanting                




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