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cattle business could be profitable.67 Petitioner purchased a
herd of purebred Brahman cattle from Mr. Partin in or about 1982
or 1983. Most of the cattle were midage to older-age cattle, and
a few were 1-2 year-old heifers. Petitioner joined the American
Brahman Beef Association and registered a brand.
In 1989, petitioner returned the cattle back to Mr. Partin.
The market for cattle at this time was not good. When Mr. Partin
took the cattle back in 1989, the cattle were in good condition.
Mr. Partin sold the cattle off over time.
Petitioner owned approximately 25 Ferrari automobiles in
1985 to 1988. He did not sell any of the Ferraris in 1985
through 1988. The Ferraris were damaged by vandals, and
petitioner went to a dealer to get the damages repaired.
Petitioner also had alternators replaced, carburetors cleaned
out, and timing belts changed, etc. Petitioner was a member of
the Ferrari Club of America.
Petitioner did not maintain separate bank accounts for the
orange grove, the cattle, or the Ferraris. Petitioner did not
report any business activities relating to the orange grove, the
cattle, or the Ferraris on any income tax returns for the
relevant tax years. To the extent petitioner did report any
67Mr. Partin testified that “the Brahman business was really
good. We had good foreign sales, good domestic sales. And I
just told him that I thought it would be a good business for him
to get into. He had some land he could put some cattle on.” He
also testified that “we were selling our yearling bulls for
$1,500 apiece and our heifers for about the same price.”
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