Michael J. Rozzano, Jr., and Rose Marie Rozzano - Page 7




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               After sustaining yearly losses in the early years of                   
          operations, petitioners were somewhat, but not overly, concerned            
          with the losses incurred because they thought that they could               
          “get a handle on the expenses and get them under control.”  But             
          as time went on, it became evident to petitioners that there were           
          too many contingencies that were beyond their control which                 
          caused their losses to be greater than they ever expected.                  
          Petitioners attempted to forecast a profit, or at least a break-            
          even point by utilizing both detailed operating statements and              
          projected budgets which modified their business plan.  However,             
          they were unable to reach a break-even point, even after                    
          following their carefully modified business plan.                           
               Factors contributing to their inability to keep to plan                
          included a variance in hay costs fluctuating upon the number of             
          horses, and unpredictable conditions whereby petitioners were               
          unable to grow an adequate amount of hay on their pastures.  This           
          resulted in the purchase of additional hay.  Moreover, a leaky              
          roof in one of the years at issue resulted in a loss of a large             
          portion of their hay reserves.                                              
               Petitioners provided full care and all of the services                 
          required of the horses boarded at Sugar Tree.  In particular, the           
          indoor arena provided a benefit to their boarders in the winter,            
          as the horses could be ridden indoors.                                      








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