Victor A. and Marion W. Prieto - Page 6




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          that grades each rider on his form.  Petitioners’ daughters                 
          mostly competed in equitation events.                                       
               Petitioners used the same ponies that their children rode              
          for pleasure to start the horse activity.  At the start of the              
          horse activity, petitioners purchased Welsh ponies for the horse            
          activity.  They chose Welsh ponies because that was the type of             
          horse their daughters were riding.                                          
               When they first started the horse activity, petitioners                
          talked to veterinarians, trainers, and other owners and read                
          periodicals about hunter and jumper horses.  Petitioners also               
          owned books about ponies, hunters, and jumpers.  Petitioners                
          attended seminars, clinics, and award banquets put on by horse              
          organizations.                                                              
               C.   Employees Hired by Petitioners                                    
               Around May 1991, petitioners hired Joe Norick to be the                
          horse activity’s trainer.  In the middle of 1993, petitioners               
          hired Nicole Shahinian (Nicole) to ride their horses.  Shortly              
          thereafter, petitioners decided to replace Mr. Norick with a new            
          trainer.  One of the reasons petitioners decided to replace Mr.             
          Norick was because Jill and Claire could not ride the horses                
          petitioners owned.  Petitioners replaced Mr. Norick with Nicole.            
               At this time, Nicole was responsible for training the                  
          horses, giving their daughters lessons, and supervising all                 
          aspects of the horse activity (including supervising people                 






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