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activity, and did not maintain an inventory accounting for each
of his horses.
His testimony indicates that petitioner’s primary
expectation for a profit comes from the anticipated appreciation
in the value of his assets, his ranch property and improvements
and his horses. Because of the absence of supporting
documentation, such as an outside appraisal, records from the
sale of comparable ranch property in the area, or receipts for
the cost of the improvements to his ranch, petitioner failed to
substantiate the value of his ranch. Furthermore, in response to
direct questioning from this Court, petitioner admitted that the
current value of his ranch is probably less than the cumulative
amount of losses he has claimed from his horse activity.
Petitioner speculated that his property will continue to
appreciate tremendously in the future, but he did not introduce
any objective evidence of projected increases in property values
in the area of his ranch for the Court to consider. As to the
values of his horses, petitioner’s 1997 return showed a sale of a
horse at a loss of $7,500, undermining his own unverified and
self-serving testimony that he expects to profit from the sale of
his horses. Petitioner failed to substantiate the value of his
assets or the likelihood of any appreciation in the value of
these assets. The record clearly shows that petitioner’s horse
activity has produced a history of losses. For each year since
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Last modified: May 25, 2011