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Giles Inc.’s Federal and State tax returns. The record does not
contain any of Giles Inc.’s financial statements or indicate a
fair market value for Giles Inc. (or a fair market value for
petitioner’s interest in Giles Inc.).
III. Falling Water Way Property
Petitioner purchased the Falling Water Way property in 1983.
The Falling Water Way property is approximately 1-1/2 acres in
size and includes the house in which petitioner lives, a barn, an
arena (added by petitioner in August 1989 at a cost of $7,797) in
which to train horses, four stalls in which to keep horses, and
some pens. Petitioner believed during the relevant years that
the design of the Falling Water Way property allowed her to keep
a maximum of six horses on the property. As of the time of
petitioner’s trial, the fair market value of the Falling Water
Way property was not more than $400,000.
Petitioner has paid mortgage interest and property taxes as
to the Falling Water Way property in each year that she has owned
it. She deducted the full amount of these items on her
Schedules A, Itemized Deductions.
IV. Petitioner’s Horse Activity
Petitioner enjoys horses and has been involved with them
throughout her entire life. In 1985, she joined the Arabian
Horse Association, the California Arabian Horse Association, the
United States Dressage Federation, and the Los Angeles Dressage
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