- 36 -
Petitioners spent $6,546 on corrals and arenas to improve the
ranch for use in their horse activity. The record does not
reflect clearly the total cost for all the improvements. As of
July 14, 1998, the fair market value of the ranch, based on its
use as a horse ranch and residence, was $409,000.
As of July 1998, petitioners’ horses had a fair market
value of $307,000. Respondent’s expert, Deborah McMahon-King,
valued the herd at $289,500, while petitioners’ expert, Dr.
Cortelezzi, valued the herd at $496,500. Both reports were
conclusory. Ms. McMahon-King’s report offered at least some
explanation for her valuation of specific horses, however, and we
found her report more reliable than Dr. Cortelezzi’s report. See
Buffalo Tool & Die Manufacturing Co. v. Commissioner, 74 T.C. 441
(1980); Estate of Hinz v. Commissioner, T.C. Memo. 2000-6 (slip
op. at 27 n.15) (citing 15 Mertens, Law of Federal Income
Taxation, sec. 59.08 at 22 (1999)).
Ms. McMahon-King did not value three horses in the herd, La
Sensacion de Norco, Presumida de Besilu, and Adelita LaCe. Dr.
Cortelezzi valued these horses at $6,000, $15,000, and $3,500,
respectively. We find that the horses had values of $6,000,
$10,000, and $1,500, respectively, for a net addition of $17,500
to Ms. McMahon-King’s figure of $289,500.11
11Our findings with respect to Sensacion de Norco and
Presumida de Besilu are based upon Ms. McMahon-King’s valuation
(continued...)
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