Opinion ID: 1600
Heading Depth: 2
Heading Rank: 1

Heading: Lost Creek Animal Sanctuary

Text: The facts are largely undisputed. Keith and Sharon Billingsley, along with their son Doug Billingsley, operated Lost Creek Animal Sanctuary on their Kansas farm. The Sanctuary sheltered a variety of exotic animalsincluding tigers, bears, lions, cougars, monkeys, and alligatorsno longer wanted by zoos or circuses. It was incorporated as a non-profit organization in 1994, with the hope that it would be financed through donations. Donations, however, ultimately proved insufficient to maintain the Sanctuary. In 1999, the Billingsleys created Animal Entertainment Productions (AEP). AEP was formed to generate income by exhibiting the Sanctuary's exotic animals in educational settings or entertainment events such as magic shows. AEP was a general partnership co-owned by Keith, Sharon, and Doug. To assure AEP's legitimacy as a business, the Billingsleys obtained licenses from state and federal agencies to house and exhibit the animals. Doug received extensive training in animal handling. He spent time working with magic shows involving large cats, in both Malaysia and on a Singapore-based cruise ship. He also worked in the lion habitat of the MGM Grand Casino in Las Vegas. At times, Doug received a salary from AEP, and engaged in substantial marketing efforts to obtain business for the partnership, even traveling to various locations to meet with potential customers. Although not a large success, AEP did produce a few performances, and occasionally leased its animals to other companies as a source of income. In 2001, AEP received a Small Business Administration (SBA) loan in the amount of $131,000. Those funds were used to purchase equipment, build a shop, and pay Doug's salary. In general, the Billingsleys used income from other sourcessuch as Keith and Sharon's full time jobs as social workersrather than income derived from AEP, to service the loan. AEP filed tax returns indicating it always operated at a net loss, despite earning some income from shows and sales of animals and equipment. AEP's operating expenses always outweighed the income the partnership generated. Keith, Sharon, and Doug also deducted AEP's losses on their personal tax returns.