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Additional Background
Mr. Rinehart advertised the horse breeding activity in trade
publications, local horse association publications, and at horse
shows. Mr. Rinehart gave away baseball caps, pens, and other
promotional items with the Compass R Ranch name on it. Mr.
Rinehart wore to horse shows jackets embroidered with the logo of
the Compass R Ranch and with the names of his stallions. Mr.
Rinehart wrote articles to publicize the Compass R Ranch.
Mr. Rinehart had stationery and business cards that bore the
name Compass R Ranch.
From 1991 through 1999, Mr. Rinehart did not show many of
his horses; instead, he concentrated on building up a broodmare
band and increasing his stock of offspring of each stallion.
That way he had an inventory of horses of varying ages and
pedigrees to sell in order to provide purchasers with a variety
of choices. As part of the horse breeding activity, Mr. Rinehart
also culled some of his horses.
During the years in issue, Mr. Rinehart sold seven horses.
This was an increase from the previous years, 1991 through 1993,
when he sold no horses. Mr. Rinehart sold his horses for the
following total amounts: $2,441 in 1994, $4,945 in 1995, $5,960
in 1996, $14,929 in 1997, and $15,360 in 1998.
During the years in issue, Mr. Rinehart was a pilot. He
worked an average of only 5 days a month. On December 1, 2000,
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