Harland and Shirley Stonecipher - Page 8




                                         -8-                                          
               Petitioners did not hire any ranch consultants to assist in            
          managing the cattle ranch.  Petitioners did not belong to a                 
          cattlemen’s association.                                                    
               During the years in issue and in prior years, petitioners              
          maintained no formal books and records relating to the cattle               
          ranch, no records of the cattle inventory, and no ledgers,                  
          written business plans, or written cost analyses.  Petitioners              
          maintained no records of which cows were bred, nor of which cows            
          were calved and sold.                                                       
               Petitioner did make some miscellaneous handwritten notes               
          about the cattle on scratch pads, which he generally kept on the            
          dashboard of his truck for a while before discarding.                       
               During 1993, petitioners maintained no separate bank account           
          relating to the ranch activity.  Rather, financial matters                  
          relating to petitioners’ personal and family activities and to              
          the ranch activity were handled through the same bank account.              
          During 1994 and 1995, petitioners did maintain a separate bank              
          account for financial activity relating to the cattle ranch.                
               For the years in issue, petitioners retained receipts                  
          relating to expenses incurred in connection with the cattle ranch           
          activity.                                                                   
               Petitioners estimate that as of 1999 the property and                  
          improvements on the ranch had a market value of approximately               








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