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3. The Dog-Breeding Business
In 1998, Mrs. Alexander also operated a beagle-breeding
business from petitioners’ home. Petitioners’ three daughters
assisted Mrs. Alexander with this business throughout the year.
Petitioners’ daughters are Margot, who was 17 years old in 1998;
JCA, who was 9 years old; and JRA, who was 8 years old.4 The
daughters performed tasks such as cleaning the dogs and the yard
in which they exercised, putting up fencing, taking out the
garbage, and caring for newborn puppies.
Petitioners credited each daughter with $4,250 of earnings,
for a combined total of $12,750. In general, petitioners did not
pay their daughters in cash. Instead, petitioners kept a running
total of their daughters’ earnings. When a daughter wished to
make certain purchases, petitioners bought the goods or services
for the daughter and deducted the purchase price from the
daughter’s running total. If the balance of a daughter’s running
total was insufficient to make a purchase, the daughter was
allowed to receive an advance or “go negative.”
Petitioners did not require their daughters to pay for basic
goods such as food. Their daughters were required, however, to
pay for nonessentials such as their share of family ski trips or
family trips to Disneyland. The daughters also paid for items
such as books, room decorations, toys, movie rentals, and certain
4 The Court uses only the minor children’s initials.
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Last modified: May 25, 2011