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of the horse breeding business including showing, breeding, and
selling the horses. Over the years, he hired professionals to
train his horses. When Doc Bar was not producing foals, Mr.
Rinehart sought advice from veterinary experts and had the
stallion evaluated by experts. In 1996, Mr. Rinehart added the
services of a specialist in equine reproduction, Dr. Allen, to
the horse breeding activity. We conclude that this factor is
indicative of the requisite profit motive.
Time and Effort Expended by Mr. Rinehart
Mr. Rinehart was engaged in all aspects of the horse
breeding activity including: (1) Hiring and firing all labor,
(2) purchasing of mares and stallions, (3) breeding and raising
the horses, (4) training of the horses, (5) culling the horses,
(6) maintaining the horses, (7) advertising the activity, and (8)
promoting the activity. Respondent concedes that Mr. Rinehart
spent significant amounts of time in carrying on the horse
breeding activity. This factor is indicative of the requisite
profit motive.
The Expectation That Assets May Appreciate in Value
A number of experts testified at trial. Internal Revenue
Service (IRS) real estate appraiser Armando Rodriguez concluded
that as of December 31, 1996, the value of the Compass R Ranch
was $406,000. Paul Bierschwale, a real estate appraiser,
concluded that as of December 31, 1996, the value of the Compass
R Ranch was $500,000. Respondent argues that we should accept
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