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FINDINGS OF FACT
Raymond Murphy has been a veterinarian specializing in
horses for forty years. He also became a real estate developer,
and a few of the deductions originally contested in this case
come from that business. But the bulk of this case, and Murphy’s
great pleasure, comes from breeding, raising, and trading
thoroughbred horses. Although Murphy has owned a stableful over
the years, only three horses figure in this case: Hamseh, Desert
Spice, and On the Piste. All three are broodmares, and all came
to Murphy from what he described as his “wheeling and dealing”
and “whipping and dipping” with Philip DeVere Hunt of Tipperary,
Ireland, a fellow breeder whom Murphy has long known.
Murphy bought Hamseh and Desert Spice from Hunt in 1994.
Hamseh cost him $600,000, which he financed in part with a
promissory note for $425,000 in Hunt’s favor. Interest on this
note accrued at a rate of ten percent per annum on any unpaid
balance, and the note required interest payments in August 1995
and August 1996, and then all remaining principal and interest by
December 31, 1996. The note stated that “all payments shall be
first applied to interest and the balance to principal.”
Desert Spice cost Murphy $385,000. He financed $379,000 of
the total price with a promissory note. Like the note for
Hamseh, this note also had a specific repayment schedule:
(1) $40,000 of principal in May 1995; (2) interest at ten percent
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