Rhett Rance Smith and Alice Avila Smith, et al. - Page 63




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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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