- 17 -
Petitioner contends that he had the necessary expertise in
farming to operate a farm for profit. He was born and raised on
the family farm. He had previous experience producing row crops,
hay, and livestock. He had conversations with other farmers in
the area.5 Additionally, he consulted with two expert advisers,
Harris and a sawyer.
The record does not show, however, that petitioner knew how
or intended to make a profit from his current farming
undertakings. He did not seek expert advice on how to operate
his farm profitably. He discussed farming with his farmer
clients and farmer neighbors, but there is no evidence that they
gave him advice about farming for profit. This factor favors
respondent.
3. The Taxpayer’s Time and Effort
We next consider the time and effort petitioner expended in
conducting the farming activity. A taxpayer’s devotion of much
time and effort to conducting an activity, particularly if the
activity does not have substantial personal or recreational
aspects, may indicate an intention to derive a profit. Sec.
1.183-2(b)(3), Income Tax Regs.
5Petitioner also testified that he consulted experts after
2000. Stating the obvious, petitioner could not possibly have
carried on the farming activity during 1998 and 2000 in
accordance with expertise garnered later. This testimony is
therefore irrelevant.
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011