Geraldine H. Pearson - Page 14

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          depreciation and $244,178 counting depreciation.  During the                
          years in issue (1988 to 1990), petitioner lost $79,955 not                  
          counting depreciation and $97,404 counting depreciation.                    
               Craig Gee (Gee), the revenue agent who audited petitioner's            
          returns, testified that petitioner said during the audit that she           
          had a profit in only 1 of the 37 years she ran the farm.  That              
          profit was for a year in the 1970's.  Gee's testimony was based             
          on his contemporaneous written notes.  Petitioner said that she             
          did not recall making this statement.  We see no reason to doubt            
          Gee's testimony in light of the fact that he based it on                    
          contemporaneous notes and petitioner has no contrary                        
               This factor strongly favors respondent.                                
               6.  Amount of Occasional Profits, If Any                               
               Small occasional profits with large continuous losses may              
          indicate that a taxpayer does not have a profit objective.  Sec.            
          1.183-2(b)(7), Income Tax Regs.  Petitioner had no profits in any           
          year from 1985 to 1993, and she apparently had a profit in only 1           
          of the 37 years she ran the farm.                                           
               Petitioner correctly contends that a profit objective may be           
          present even if there is no profit, and that she must have only             
          an actual and honest profit objective, not a reasonable                     
          expectation of profit.  Petitioner cites Siegal v. Commissioner,            
          T.C. Memo. 1992-334.  In Siegal, the taxpayers bought a                     
          deteriorated citrus grove and an overgrown pasture.  The                    
          taxpayers put the property into good condition.  Although the               

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