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brood mares. The purchase price of a new brood mare, Sopresa de
Capuchino, is not in the record. The fair market values and
original purchase prices of the remaining purchased horses
totaled $103,500 and $87,838, respectively.
During the years at issue and through the date of trial,
petitioners did not maintain equine mortality insurance because
they felt the insurance was too expensive. Although petitioners
maintained fire and liability insurance on their ranch, the
record does not reflect whether that insurance covered any horse-
related losses.
Petitioners’ Time and Effort
Petitioners managed and operated their horse activity
themselves. Since 1988, petitioners have been members of the
Paso Fino Horse Association and the California Paso Fino Horse
Association. During 1992, 1993, 1994, and 1995, petitioners were
members of the American Horse Show Association. During 1996 and
1997, Mrs. McKeever was a member of the Norco Paso Fino Drill
Team.
During the years in issue, petitioners fed their horses
twice daily; cleaned, clipped, and groomed their horses daily;
and exercised, conditioned, and trained their horses 4 days each
week.8 Petitioners bred and foaled their horses. Petitioners
8Starting in 1991, most horses were kept at petitioners’
Norco ranch. Previously, petitioners had boarded the majority of
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