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A: I can't answer that, but the expenses could
fall to a certain point. Depends on -- you know, it
depends on what breaks down, or --
THE COURT: Or they could go up.
THE WITNESS: Or it could go up. Way
up. I can't make a statement saying they
will fall, or that they will go up. I can't
say that.
In determining a taxpayer's profit motive, it is not crucial
that the expectation of profit be a reasonable one; it is enough
that the taxpayer has a bona fide expectation of realizing a
profit. However, a record of continued losses over a series of
years, or the unlikelihood of achieving a profitable operation,
may be an important factor bearing on the taxpayer's true
intentions. Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965),
affd. 379 F.2d 252 (2d. Cir. 1967). We note that it has been
recognized that:
If losses, or even repeated losses, were the only
criterion by which farming is to be judged a business,
then a large proportion of the farmers of the country
would be outside the pale. It is the expectation of
gain, and not gain itself which is one of the factors
which enter into the determination of the question.
* * * [Riker v. Commissioner, 6 B.T.A. 890, 893
(1927).]
Nevertheless, even in the case of farmers or ranchers, it is to
be borne in mind that the goal must be to realize a profit on
one's entire operation. This presupposes not only future net
earnings, but also sufficient net earnings to recoup losses which
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