Sheila Mae Howard - Page 5

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          close family friend.  Carl began living with petitioner when he             
          was 11 months old.  Carl was not petitioner’s adopted child.                
          During 1998, Carl was about 11 years old and lived with his                 
          grandmother.  Carl visited petitioner during 1998 on weekends,              
          holidays, and on his summer break from school.                              
               A.  Anchor Inn                                                         
               During the taxable years at issue, petitioner operated a               
          fish camp named the Anchor Inn.  Petitioner purchased the Anchor            
          Inn from her mother in or around 1990.  The Anchor Inn is                   
          approximately 1.7 acres in size and is located on Lake Kerr.  The           
          Anchor Inn has six rental units and a boat ramp.  Each rental               
          unit has one bedroom and one bath.                                          
               The majority of petitioner’s rentals were from February to             
          May each year.  Rentals were generally short-term, typically for            
          the day or weekend.  Petitioner rented each unit for                        
          approximately $30 to $35 per night.  Guests were not charged for            
          use of the Anchor Inn’s boat ramp.  Petitioner requested a                  
          minimal cash fee from nonguests for use of the boat ramp.                   
               In or around 1993, petitioner purchased the land and two               
          houses adjacent to the Anchor Inn from her mother.  During the              
          taxable years at issue, petitioner and her mother resided                   
          separately in the two houses.                                               
               B.  Horse Breeding Activity                                            
               During the years at issue, petitioner operated a horse                 

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Last modified: May 25, 2011