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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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Last modified: November 10, 2007