Geraldine H. Pearson - Page 7

                                        - 7 -                                         
          some classes.  Petitioner bought equipment to help her avoid                
          injury from her physical condition.  Petitioner made capital and            
          fencing improvements, cared for cattle and sheep, marketed                  
          horses, and expanded operations to include horticultural                    
          products.  Petitioner suffered unexpected losses during the years           
          in issue including theft of livestock, a decline in the sheep               
          market, and unanticipated repairs.  Petitioner's farm was                   
          producing cattle, sheep, and hay at the time of trial.                      
          D.   Petitioner's Records, History of Losses, and Tax Returns               
               Petitioner did not have a separate bank account for her                
          farm.  Petitioner marked an asterisk on stubs of checks she used            
          for farm expenses.  She maintained a separate ledger for her                
          farm.  Petitioner's farm records were adequate to prepare her               
          tax returns.  Petitioner did not keep or analyze her records to             
          evaluate how her farm performed.                                            
               Petitioner reported no Federal income tax liability from               
          1985 until the time of trial.  Petitioner's tax returns were                
          prepared by William Holdner, a certified public accountant                  
          (C.P.A.).  Petitioner had income, deductions, and net farming               
          losses as shown in the chart below:2                                        
  Deductions Before  Net Loss Before                  Net Loss Including              
  Year   Income    Depreciation       DepreciationDepreciation      Depreciation       
  1985  $20,461      $31,191           $10,730           $7,682           $18,412     
  1986    8,855       30,640            21,785            8,536            30,321     
  1987    3,019       29,389            26,370            7,061            33,431     

               2 The amounts for 1985 to 1993 are correct in the                      
          stipulation but the totals are incorrect.  The totals here are              

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011