James M. and Ruth J. Riley - Page 5

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          and managed his farming operations.  His primary business is                
          cattle feeding, and his tax home during the years at issue was in           
               After petitioner retired from the Department of the                    
          Interior, he bought three farms in Jackson County, Minnesota,               
          from the Federal Farm Credit Association; namely, the DeMoore               
          farm purchased in 1986, the Sioux Valley farm purchased in 1990,            
          and the Ross farm purchased in 1997.  He raised corn and soybeans           
          on the farms.  He used part of the corn crop to feed cattle.                
               Petitioner bought the DeMoore farm in 1986 for $129,000.               
          The buildings on the farm included a house, four barns (the hog             
          raising barn, the granary, the storage building, and a fourth               
          barn), a pole shed, and two silos.  Petitioner used the house as            
          an office and for his lodging when he was at the farm.  He stored           
          old scrap items in the storage building, allowed others to store            
          firewood in the pole shed, and parked a “farm car” in the                   
          granary.4  He did not use the pole shed, the silos, or the barns            
          in his farming operations.                                                  
               Petitioner purchased the 160-acre Sioux Valley farm in 1990            
          for $1,375 per acre.  The improvements on the Sioux Valley farm             
          consisted of a house and a well.  He did not use the house or the           
          well in his farming operations.                                             

               4Aside from petitioner’s description of the vehicle as a               
          “farm car”, there is no evidence in the record as to the car’s              

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