- 9 -
have been sustained in the intervening years. Bessenyey v.
Commissioner, supra at 274.
Even if we accept that petitioner will achieve his goal of
increasing the size of his herd to 100 head, and thereby the
number of calves born and available for sale, petitioner has
failed to produce any evidence that this will ever produce income
in excess of his expenses. In light of the foregoing, we find
that petitioner has failed to demonstrate that he possessed the
requisite profit motive for his ranching activities.4
Accordingly, we sustain respondent on this issue.
Section 183(b) states that:
In the case of an activity not engaged in for profit to
which subsection (a) applies, there shall be allowed --
(1) the deductions which would be allowable under
this chapter for the taxable year without regard to
whether or not such activity is engaged in for profit,
and
(2) a deduction equal to the amount of the
deductions which would be allowable under this chapter
for the taxable year only if such activity were engaged
in for profit, but only to the extent that the gross
income derived from such activity for the taxable year
exceeds the deductions allowable by reason of paragraph
(1).
Substantiation of the Schedule F expenses was not raised as an
issue in this matter. Based on the record, the Court is
satisfied that petitioner incurred expenses equal to the gross
4We have considered the possibility that petitioner might be
holding the ranch for appreciation and sale in the future for
profit. See sec. 1.183-2(b)(4), Income Tax Regs. Petitioner,
however, stipulated that he plans to build a house on the ranch
and retire there.
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