Dennis L. and Margaret J. Knudsen - Page 18




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         shoulder to repair damage caused by stacking hay and cleaning                
         stalls.  In 2001, she had surgery on a knee injury resulting from            
         a chimpanzee attack.                                                         
              In addition to her duties at ERE, Mrs. Knudsen spent time               
         attending seminars on various animals.  At one seminar, Mrs.                 
         Knudsen learned how to implant microchips in the animals.                    
         Petitioners attended seminars on hand feeding birds and on                   
         constructing bird breeding facilities.  Mrs. Knudsen also                    
         dedicated a significant amount of time to her various membership             
         organizations.  She spoke at an ISZ-sponsored seminar at the                 
         Omaha Zoo and in 2000 hosted the ISZ convention.                             
         Petitioners’ Income Tax Returns                                              
              Most of petitioners’ breeding activity losses resulted from             
         depreciation of the animals, infrastructure, and improvements.               
         On Schedules F, Profit or Loss From Farming, of their returns,               
         petitioners reported gross income and expenses and net profit or             
         loss for 1995 through 2002 relating to ERE, as shown in the                  
         following table:                                                             
                                                 Net profit                           
         Year         Gross income       Expenses        or (loss)                    
         1995           $22,138        $376,943        ($354,805)                     
         1996           49,011         342,794         (293,783)                      
         1997           23,528         365,544         (342,016)                      
         1998           69,639         355,230         (285,591)                      
         1999           59,353         412,127         (352,774)                      
         2000           50,423         481,386         (430,963)                      
         2001           63,977         534,483         (470,506)                      
         2002           104,671        436,478         (331,807)                      







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