Robert and Karen O'Connor - Page 15




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          action was taken to increase the receipts from the farm activity.           
          Petitioner testified that sometimes he did not charge Larralde              
          rent but instead accepted livestock in trade.  Pursuant to the              
          existing leases, Omega was required to fix water pumps and mend             
          fences in order to provide adequate water and pasture for Omega’s           
          and Larralde’s livestock.  CBR was required to fix major                    
          mechanical failures; however, in reality, Omega paid for these              
          repairs and petitioner claimed the costs as charitable                      
          contributions in the form of labor performed by Omega’s                     
          employees.                                                                  
              According to petitioners, the almond trees on the property             
          were maintained to produce organically grown almonds that could             
          be sold at a higher market price than almonds that were not                 
          produced organically.  However, petitioner also testified that              
          the almond trees were dwarfed and stunted due to a lack of proper           
          care and could not be watered or chemically fertilized.                     
          Therefore, the only way to maximize output from the almond trees            
          while still maintaining organic certification was to replace the            
          dead or stunted trees.  Yet, from 1990 through 1995, Omega spent            
          a total of $467 on replacement trees for the orchard. We find it            
          difficult to envision a profitable farm activity where the very             
          crops from which a profit could be derived are not cared for or             
          replaced with regularity.                                                   








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