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activity for 1997 through 2000 and only nominal amounts
thereafter. This factor is not favorable for Zane.
2. Taxpayer’s Expertise--Zane is a noted longtime expert in
judging, showing, and breeding American Staffordshire Terriers
and Staffordshire Bull Terriers. Accordingly, this factor favors
Zane.
3. Time and Effort Spent Conducting the Activity--Zane
testified that he spent an average of 10 to 12 hours per week on
the dog breeding activity. He also testified that he spent 20 to
30 hours per week on the dairy farming, along with working full
time (presumably at least 40 hours per week) at Beneco. Zane
also testified about spending time in charitable activities. It
appears that he was spread thin and that his estimates of hours
may be overstated. Overall, however, this factor favors Zane.
4. Expectation That the Assets Will Appreciate in Value--
Zane believed that one of the dogs was worth $50,000, but he
failed to corroborate his belief. In addition, he did not
specify whether the dog was solely owned or coowned. If we were
to assume that Zane’s belief was correct and that he was the sole
owner, the $50,000 would not be sufficient to recoup the $275,000
in losses already incurred by 2001. Zane also had potential to
earn revenue from insemination (breeding) and the sale of
puppies. The difficultly here is the lack of documentation
and/or corroboration supporting Zane’s contention. The income
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Last modified: March 27, 2008