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Notably, however, despite the significant stall rental
statistics and petitioners’ thorough accounting methods, we
cannot overlook Mr. Rozzano’s refreshingly candid testimony at
trial that he came to realize sometime in 1999 that petitioners
would neither earn a profit nor reach a break-even point if they
held to their existing boarding fees, nor could they raise
boarding fees or hire additional help in order to become
profitable. Mr. Rozzano reached this conclusion after he
analyzed all factors necessary to attempt to make the business
more profitable.
In fact, after his analysis, he calculated that these
measures (i.e., raising boarding fees and hiring additional help)
would likely increase his operating costs taking into account the
scope of the services provided to the boarders. Moreover, it was
likely that the terms of the contracts then existing with the
boarders meant that any modification to the monthly rental
agreements would have placed petitioners in breach of contract.
Mr. Rozzzano then did what any prudent business person would do,
attempt to lessen expenses until the business including the
property could be sold.
Petitioners’ rental fees remained unchanged after Mr.
Rozzano decided to sell Sugar Tree (a decision made sometime in
2000). Notably, petitioners still kept meticulous business
records and used word-of-mouth to advertise their boarding
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