# We gave the horse lessor a cash deposit and asked for a W-9



## Learner (9 mo ago)

They refuse to provide a W-9 and we are not going to send more money until they cooperate. But I cannot figure out if we could recover our deposit. 
Still learning.


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## horselovinguy (Oct 1, 2013)

Sounds like possibly the person/business is not declaring lease money paid....
If the animal is privately owned, so is the cost to have it boarded...not seeing a W-9 unless you are trying to declare business expenses...
If they refuse...well, you've got a problem.
And for the most part, can't see many "declaring" a cash transaction or declaring to pay more taxes as income added...

Any leases I did were cash/check paid to the owner for use of the horse, period.
My check was my proof of months use paid for.

Think for you, you need to call your CPA and financial advisor for a answer...
Good luck.
🐴...


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## Learner (9 mo ago)

horselovinguy said:


> Sounds like possibly the person/business is not declaring lease money paid....
> If the animal is privately owned, so is the cost to have it boarded...not seeing a W-9 unless you are trying to declare business expenses...
> If they refuse...well, you've got a problem.
> And for the most part, can't see many "declaring" a cash transaction or declaring to pay more taxes as income added...
> ...


Thank you for your response. We have bank transactions for the deposit. So it may actually be a legal solution I need not financial advice. 
IRS tells me that lacking a W-9 from a vendor our business must withhold 28% of all monies paid that vendor. Sad situation but the IRS seems serious to stamp out 'under the table deals' as they track all transactions over 600 USD.


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## QtrBel (May 31, 2012)

As you would not be able to take that money off on your taxes and the income is likely not being reported by them as income you will likely lose your lease if you push for the information.


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## My Salty Pony (Jan 1, 2022)

So you are wanting to lease a horse from a barn?
I have never heard of a request for a w-9 to least a horse, I would be very wary if someone asked me to do a w-9 for a horse that I was leasing out, but since I'm not into leasing out my horses maybe this is something that is done? With all the scams that is happening now adays I would think this owner of the horse dont trust you on this, but I could be wrong.


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## tinyliny (Oct 31, 2009)

Learner said:


> Thank you for your response. We have bank transactions for the deposit. So it may actually be a legal solution I need not financial advice.
> IRS tells me that lacking a W-9 from a vendor our business must withhold 28% of all monies paid that vendor. Sad situation but the IRS seems serious to stamp out 'under the table deals' as they track all transactions over 600 USD.


If you pay them by check, won't that be ok? I think the tracking is only for cash payment apps like Venmo or Paypal or Zelle, . . .no?

These new taxes are tough. As an artist who sells occasionally with Venmo, I find this to be both unnecessary intrusion and a focus on the small gig economy that is regressive in nature.


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## ladygodiva1228 (Sep 5, 2012)

I guess I am missing the reason why you need to get a W-9 for a lease of a horse. That seems like a very strange request and I personally would not lease a horse to someone who was asking for one.


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## Learner (9 mo ago)

ladygodiva1228 said:


> I guess I am missing the reason why you need to get a W-9 for a lease of a horse. That seems like a very strange request and I personally would not lease a horse to someone who was asking for one.


Sorry tried to outline that we are a business. IRS explicitly told us we were obligated to report the lease expenses via a 1099. We do not want to face IRS penalties and have been issuing 1099s to all vendors with payments > 600 USD. Winning many vendors to read and complete the self-assessment process of certifying their legal structure via the W-9. We are avoiding those who do not care to comply with the IRS. No 'under the table' deals for our company! Venmo and other gig banking sites are now reporting transfers of >600 USD in a single year. Guess you won't be leasing horses to folks like us that are caught in the IRS traps and need to report payments.


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## QtrBel (May 31, 2012)

So your business is leasing the horse and not you personally?


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## Learner (9 mo ago)

QtrBel said:


> So your business is leasing the horse and not you personally?


EXACTLY!


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## QtrBel (May 31, 2012)

Can I ask why?


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## Learner (9 mo ago)

QtrBel said:


> Can I ask why?


Because we are a business that offers riding lessons and we choose to lease some horses rather than buy them for our lesson programs. Does everybody else BUY all their horses? what have I missed?


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## lb27312 (Aug 25, 2018)

Sorry but did you ask if the person would do the W-9 prior to giving them money? Some outfits are big enough to work the income around the cost of their business.... if this is one person they probably don't have the option to do that. I wouldn't be able to do a lease with a W-9 with the horses I have. There are companies that lease horses(think bucking strings) but they are usually a company that have the means to absorb the extra income. Just my 2 cents...


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## Learner (9 mo ago)

lb27312 said:


> Sorry but did you ask if the person would do the W-9 prior to giving them money? Some outfits are big enough to work the income around the cost of their business.... if this is one person they probably don't have the option to do that. I wouldn't be able to do a lease with a W-9 with the horses I have. There are companies that lease horses(think bucking strings) but they are usually a company that have the means to absorb the extra income. Just my 2 cents...


So if I understand we need to find lessors that don't report their income. You say "I wouldn't be able to do a lease with a W-9 with the horses I have". How does the W-9 impact a lease? Lacking a W-9 does that mean there is no requirement to report the income? 

We are an entity required by the IRS to file an annual information return with them. If a vendor refuses to provide us with its Taxpayer Identification Number, we must begin backup withholding of 28 percent of any payments made to that vendor until the vendor provides us with a Form W-9 and the missing information. We can be subject to severe penalties for failing to withhold and submit backup withholding. 
It is not optional to file a Form W-9 to provide your correct Taxpayer Identification Number (TIN) to the person who is required to file an information return with the IRS to report, for example:

Income paid to you. 
Very confused by your advice to potential lessors.


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## Dreamcatcher Arabians (Nov 14, 2010)

Learner said:


> So if I understand we need to find lessors that don't report their income. You say "I wouldn't be able to do a lease with a W-9 with the horses I have". How does the W-9 impact a lease? Lacking a W-9 does that mean there is no requirement to report the income?
> 
> We are an entity required by the IRS to file an annual information return with them. If a vendor refuses to provide us with its Taxpayer Identification Number, we must begin backup withholding of 28 percent of any payments made to that vendor until the vendor provides us with a Form W-9 and the missing information. We can be subject to severe penalties for failing to withhold and submit backup withholding.
> It is not optional to file a Form W-9 to provide your correct Taxpayer Identification Number (TIN) to the person who is required to file an information return with the IRS to report, for example:
> ...


I think where you're running at cross purposes to most of us is, you're leasing your lesson horses and most people own their lesson horses or as trainers, are hired by the barn who owns the horses used in the lesson program. Some trainers only do training of horses owned by their clients and do not do lessons for people who don't own their own horses. Most people doing leases are either leasing mares for breeding purposes, stallions for breeding or a show horse for a season or 2. In the case of the mares & stallions, if the person is doing business, then they could possibly use the expenses on their taxes, the show horse, not normally.


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## Dreamcatcher Arabians (Nov 14, 2010)

tinyliny said:


> If you pay them by check, won't that be ok?


No, the IRS is no longer just accepting cancelled checks as proof enough. You HAVE to provide a receipt. It's been that way for several years now. If audited and no receipts, then they can decline those expenses and leave you holding the bag.


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## lb27312 (Aug 25, 2018)

Sorry didn't mean to be confusing but if a W-9 is done then there's a potential they will be getting a 1099 which will need to be addressed on their taxes and for some people that puts them in another tax bracket or tells the IRS that they are getting money they don't want them to know. And I'm saying it might not be enough money for them to justify doing that.... or they don't have a big enough business to justify it. For me one horse if I were getting $600+ a year and I need to put that on my taxes, yeah I can deduct certain things but probably not enough to justify it.

I could be totally wrong as I haven't had to worry about that for a while and I know the laws have changed quite a bit recently(as in a few years). 

Good Luck!


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## QtrBel (May 31, 2012)

lb27312 said:


> Sorry but did you ask if the person would do the W-9 prior to giving them money? Some outfits are big enough to work the income around the cost of their business.... if this is one person they probably don't have the option to do that. I wouldn't be able to do a lease with a W-9 with the horses I have. There are companies that lease horses(think bucking strings) but they are usually a company that have the means to absorb the extra income. Just my 2 cents...


Those I know do. They also board and several of those owners will offer their horses for lease for students in lessons and for extra ride time arranged by the barn owner for a preselected horse based on students ability in exchange for a discount on board. I certainly wouldn't lease a horse of mine to business to use in lessons. I've rented horses that came with a driver, handler and carriage for different occasions from weddings to funerals to historic home tours, lighted tours or caroling. Don't know how that would be affected by the new laws but it was simply listed as income back then.


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## RMH (Jul 26, 2016)

My take is you'll have to lease horses only from owners who have horses as a business. Those that make money from their horses and deduct the expenses from their income. A private horse owner is not going to want to give you a W-9 to receive a 1099 at the end of the year. Who wants to report income from an expensive hobby when they aren't set up to deduct the expenses. Perhaps you can buy hay or feed or pay part of the board which would be deductible for you instead of making a payment directly to the horse owner. If you haven't already used the horse you can go to the owner and explain that the current arrangement is not going to work for your business model and ask for a refund.


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## ladygodiva1228 (Sep 5, 2012)

Learner said:


> Because we are a business that offers riding lessons and we choose to lease some horses rather than buy them for our lesson programs. Does everybody else BUY all their horses? what have I missed?


Are you a new business? Asking because the lesson barns I know of around me have all purchased their lesson horses. Now some of them lease their horses to clients who are taking lessons, but those clients are not a business so no W-9 is asked for.


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## jaydee (May 10, 2012)

Learner said:


> So if I understand we need to find lessors that don't report their income. You say "I wouldn't be able to do a lease with a W-9 with the horses I have". How does the W-9 impact a lease? Lacking a W-9 does that mean there is no requirement to report the income?


The way I see this, as the person paying out money to someone to lease a horse from them, your only tax requirement is to provide your own evidence that you paid X amount of money a year to that person, to off set against your own tax.
You should never use cash payments when you pay them, you should have proof of that money going from your bank account into their bank account.

The money they receive from you is their 'tax concern' to declare as income on their own returns.


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## Learner (9 mo ago)

ladygodiva1228 said:


> Are you a new business? Asking because the lesson barns I know of around me have all purchased their lesson horses. Now some of them lease their horses to clients who are taking lessons, but those clients are not a business so no W-9 is asked for.


We are five years into this equine experience. Our team has investors from multiple backgrounds and some serious disciplines thus a company paranoia to comply with IRS guidelines. Working hard and trying to stay out of the TAX spotlight. None of us have a lifetime of how an olde tyme horse business operated. Our barn manager is worried that our fanatic compliance protocol will poison 'Horse people' from doing business with us. We have bought horses but now find some flexibility in rotating horses - even selling on our leased horses. Expense of a lease vs depreciation of a horse is a constant review for our budget committee. Also has benefits to dampen cash demand. Learning


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## Learner (9 mo ago)

jaydee said:


> The way I see this, as the person paying out money to someone to lease a horse from them, your only tax requirement is to provide your own evidence that you paid X amount of money a year to that person, to off set against your own tax.
> You should never use cash payments when you pay them, you should have proof of that money going from your bank account into their bank account.
> 
> The money they receive from you is their 'tax concern' to declare as income on their own returns.


The IRS has a distinctly different view. We must report all payments over 600 USD [Cash/check/credit card] based on IRS criteria. It is an IRS effort to cause use to RAT out everyone we pay! Companies failing to provide the tax reporting 1099 forms to their vendors may face IRS penalties of at least $250 for each incident.
The IRS also imposes penalties for sending 1099 information late to the IRS. According to the IRS website, the information is usually due by February 28, with penalties of up to $100 per incident for missing the deadline.
Although the minimum penalty is $250, total penalties for the calendar year could total as much as $500,000, depending on the size of the business. We report 1099s for Farriers, Vets, Shavings and yada. We have been 'scared straight'.


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## horselovinguy (Oct 1, 2013)

As a prior business owner I know the IRS wants all kinds of documentation and where did the $ go from the accountant.
There use to be companies who leased horses to riding establishments for summer camps, lessons, trail rides. Don't know how different laws are today than 20 years or so ago...
I know that a day camp that leased horses for their riders to lesson with did use private animals...they got around the $600 thing by writing multiple checks since all expenditures for record keeping need a paper-trail..
A "tweaking" of IRS law but it would free you from that form needed cause can promise you if you took that "I must.." to me, you would be told forget it and get out.
Because you are "following" such so carefully _*is*_ going to close many doors to you.... 😐

You also just mentioned selling leased horses may find you in more hot water if what I interpreted as selling something you _not_ own but borrowed for a specified length of time d_oes not give you ownership and right to sell......_
Make your distinction crystal clear of your intent in those lease agreements vs. lease to sale agreements.
You might have someone who would lease you a horse for a season, but has not given permission for a sale of the animal to commence....two way different things. 

The way I'm reading your opening question and now subsequent answers and details shared sounds more you got into trouble with the IRS and now fear another audit cause a audit often brings more for many years following...and if they found something not meeting the examiners liking...oh boy!
I send you good luck, but...your accountant should be able to counsel you in how to get around that needed paper detail and still be compliant with IRS law. 
🐴... _ jmo..._


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## Learner (9 mo ago)

horselovinguy said:


> As a prior business owner I know the IRS wants all kinds of documentation and where did the $ go from the accountant.
> There use to be companies who leased horses to riding establishments for summer camps, lessons, trail rides. Don't know how different laws are today than 20 years or so ago...
> I know that a day camp that leased horses for their riders to lesson with did use private animals...they got around the $600 thing by writing multiple checks since all expenditures for record keeping need a paper-trail..
> A "tweaking" of IRS law but it would free you from that form needed cause can promise you if you took that "I must.." to me, you would be told forget it and get out.
> ...


1. When we have a rider interested in a horse we DO NOT own, we turn it over to the rider and the owner - not even looking for a commission. HANDS OFF. 
2. The IRS now catches the multiple check dodge unless you somehow pay the TOTAL 3000 to 15 people or 6 people so the total amount per person is Less Than the magic 600, Cheating is becoming very TEDIOUS.


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## stevenson (Sep 12, 2011)

ladygodiva1228 said:


> I guess I am missing the reason why you need to get a W-9 for a lease of a horse. That seems like a very strange request and I personally would not lease a horse to someone who was asking for one.


I agree with you. The price paid for leasing probably would not offset feed, farrier, vet, training and original purchase price of the horse. I would not lease to someone asking for a W9 either.


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## stevenson (Sep 12, 2011)

Are you using the leased horse for pleasure or as a business?


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## QtrBel (May 31, 2012)

They're using them in lessons. They're a business.


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## stevenson (Sep 12, 2011)

QtrBel said:


> They're using them in lessons. They're a business.


OH .. guess I missed that . I would never lease a horse to be a lesson horse. lol.


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## Learner (9 mo ago)

stevenson said:


> I agree with you. The price paid for leasing probably would not offset feed, farrier, vet, training and original purchase price of the horse. I would not lease to someone asking for a W9 either.


Seems that you make a great point that leasing your horse creates a significant 'business' case and that the losses would actually be a tax advantage to the horse lessor if they had other income. So, does it become BUSINESS v Hobby. Had not thought of the deal as a horse owner. Your thoughts?


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## updownrider (Mar 31, 2009)

I have no advice for your current situation, but definitely think in all of your future contracts for lease horses it must disclose the need for W9 info. That info should be given to you before you take possession of the horse and any money is exchanged. I know when I did contract work for businesses (not horse related) I had to supply my information up front before I did any work.


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## Learner (9 mo ago)

Thank you for the advice. Your point of W-9 disclosure and other contributor's tip is being merged into our CHECKLIST and new contract forms! Still Learning.


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## vonlora (Mar 28, 2011)

Yes, the IRS have rules to drive us all nuts and to make sure they get all that is owed to them. A W-9 is needed for anyone who provides services. If you are leasing a horse from someone who has a good horse for lessons and is not riding much (this was my case) they probably don't have the knowledge to report income and expenses on their taxes and don't want the hassle of keeping track. I am an accountant so it was not an issue for me, just more paperwork. The lease was less than I paid so it wasn't income for me thou I know of a few would used it as a way to claim their horses were a business and not a hobby so the could claim the loss. I suggested to those in this situation who don't want the hassle have the lessor pay the ranch directly towards the board bill instead of paying me.


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## geeoharee (12 mo ago)

lb27312 said:


> Sorry didn't mean to be confusing but if a W-9 is done then there's a potential they will be getting a 1099 which will need to be addressed on their taxes and for some people that puts them in another tax bracket or tells the IRS that they are getting money they don't want them to know.


Just to clarify in case anyone missed this one - there is no such thing as 'being put in the next tax bracket'. If you make $100 over the threshold, that $100 gets taxed at the new rate.


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## tsed18 (12 mo ago)

Coming from a fellow business owner that also partners with horses. I personally own my horses and my business leases from me as a neccessary business expense. Because the business is leasing them from a private party, NOT another business, no W9 is required. I don't require a W9 from my hay guy when I give him 20K for my yearly hay expenses. What he claims is his business not mine. The IRS wants everything they can get and I am very sure take pleasure in scaring small business owners, especially in the ag industry. All you are required to show is that you have equine expenses.You can also lease the horses in your personal name and show the business leasing them directly from you for $1. No W9 needed, no extra paperwork. It's up to the person you are leasing from to do their end. Personally, I don't want the responsibility of reporting someone else's social security number on my taxes. They are not employees of mine and I don't want to have to keep track of their information with all of the 3 lock protocols. We have a written agreement and that shows everything I need. I also have my insurance that covers care, custody, and control of their horses to prove I am liable for them. For a lesson program, I would definitely want ownership of the animals. That is a huge insurance liability to care for someone else's and the possibility of them removing them from my program can be the difference in having income and having no income. The monthly cost to feed and maintain is the same whether you own or lease. The lease is just an added expense as well as an added insurance expense. I have people offering me their horses because my program is all ground work and they think it would give their horse a purpse. What they don't understand is all of the paperwork and insurance liability it adds to my end. It's easier and cheaper for me to own my 6 horses and if I have a client that wants to work with their own horse, then I let my insurance company know I will be working with an outside horse for one session instead of maintaining a separate policy for that one horse constantly. I know several people who do lease other horses for their work and it works out well, but their insurance is so much higher than mine. How your business it set up (LLC, SCorp, Corporation, etc) also makes a diffence. If you are a sole proprietor, it falls on your personal taxes, not your business taxes to report what you pay out. Ask if you can lease them for $599 through the company and pay the remainder as cash. You will save yourself and the person you are leasing from a ton of headache. Most people leasing their horses aren't business entities. They are private owners who want their horse to have a job and get more attention than they can regularly provide. They aren't in it to make a ton of money. They want to cover their own expenses related to the horse so they really aren't making anything. They are taking a loss and can't claim what they paid into the horse on their taxes as anything other than an entertainment expense. If they are making $1000 of more on the lease each month, that is an agriculture tax exemption for them, so it's still a benefit. Either way, their horse is getting exercise and they have less out of pocket. There is so much red tape. I am happy to see that you are trying to do things the so called "legal" way, but I can tell you from experience that people will stop wanting to work with you and you will lose more money than you will make. The IRS and the way business structures are set up are not agriculture and equine friendly. Feel free to send me a message if you want more information on leasing vs owning for tax and insurance purposes. I have had to do all of the research and learn from my mentors. I am more than happy to share more. Good Luck!


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## gottatrot (Jan 9, 2011)

geeoharee said:


> Just to clarify in case anyone missed this one - there is no such thing as 'being put in the next tax bracket'. If you make $100 over the threshold, that $100 gets taxed at the new rate.


I think the term relates to tax withholding. If you unexpectedly make enough money to put you at a different tax rate, the withholding your employer has calculated (or you calculated based on your previous tax rate) may be well below what is needed to cover the new rate.


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## stevenson (Sep 12, 2011)

Learner said:


> Seems that you make a great point that leasing your horse creates a significant 'business' case and that the losses would actually be a tax advantage to the horse lessor if they had other income. So, does it become BUSINESS v Hobby. Had not thought of the deal as a horse owner. Your thoughts?


As a private owner and not a business it would not be a business, but I am not a tax person. lol. If it was a lease from a business to a business then I would say the W9 would be needed with the new laws.


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## Sombrablu (9 mo ago)

I’ve never heard of anyone leasing asking for this nor have I ever heard of an actually business placing their riders on leased horses. If I were them I’d be confused and cautious also. I married into a family that owned a stable and we leased horses OUT, being as we were the professionals, but we never had use to lease a horse. I’ve worked in stables of all kinds since I was ten and been around horses since I was four and it’s always been the stable where you go to find a lease not the stable that leased the horses from a third party… I’d be more concerned about my business resting on horses I don’t have complete ownership of, I would never take lessons or board at a stable that had to resort to this practice because I’ve seen too many dangerous people begin this way. Not saying you are but it’s just usually more something backyard people do that can’t afford to actually start a real equestrian business. Most people experienced enough to start a stable have enough horses to begin with, because they are horse people first and just naturally migrate into the business so it really throws up red flags in my book. If you want to be successful at this you should really buy superb quality horses and start with them even if you can only afford one or two and build slowly. You can get reliable old nags for dirt cheap that can pony kids for a half hour a day or so, give them a good retirement and keep kids safe… Leasing can really be an issue in so many ways, it can come back to haunt you and if somebody becomes injured on that horse I imagine it will be quite the legal ordeal. People want to feel like every horse in your stable has been under your ownership for long enough you know them and trust them, this does not project that kind of confidence… Just my two cents…


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