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petitioner lacked an actual and honest objective of making a
profit.
Petitioner presented no credible evidence that he had any
real plan for reversing the continuous stream of net farming
losses he has reported over the past decade. Petitioner has
never consulted an expert on the means by which he could turn a
profit, nor has he changed his operating methods in an effort to
correct what was obviously not working. This is not surprising
considering that petitioner failed to keep any meaningful records
that would allow him to gauge the present or future profitability
of his activities. Although petitioner maintained ledger sheets
recording his expenditures, there is no evidence that he used
this information in any constructive way. The following exchange
at trial is particularly illuminating in this regard:
Q: All right. When do you think that you will
buy all of the equipment that you will have to buy,
have it all paid off so that you will begin to make
money at the ranch?
A: I also expected -- I probably -- about '95 or
'96. I owe on two more pieces of equipment, one note
on each.
* * * * * * *
Q: All right. But after you pay off the
equipment, though, won't -- certain of your expenses,
they won't necessarily fall, decrease -- like, for
example, the feed expense won't fall, or the supplies
expense, or the truck expense. After you pay off your
equipment, won't those expenses -- they shouldn't
necessarily fall. Is that right?
* * * * * * *
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