Geraldine H. Pearson - Page 19

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          out of 37 years.  Petitioner has not shown that she in fact ever            
          considered whether land appreciation would more than offset her             
          losses, much less that it did so.                                           
               This factor favors respondent.                                         
               8.  Financial Status of Taxpayer                                       
               Substantial income from sources other than the activity,               
          especially if the losses generate substantial tax benefits, may             
          indicate that the taxpayer is not conducting the activity for               
          profit.  Sec. 1.183-2(b)(8), Income Tax Regs.                               
               Petitioner contends that, because she is not wealthy, her              
          purpose in having a farm was not to offset substantial income               
          from other sources.  We disagree.  While petitioner is not                  
          wealthy, her farm losses enabled her to avoid paying Federal                
          income taxes from 1985 to 1993.  Petitioner's farm losses                   
          compared to her other income5 are as follows:                               
               Year         Schedule F Losses        Nonfarm Income                   
               1985         $18,412                  $26,813                          
               1986              30,321                   34,404                      
               1987              33,431                   28,578                      
               1988              27,404                   43,652                      
               1989              36,740                   28,917                      
               1990              33,260                   24,368                      
               1991              11,093                   17,034                      
               1992              30,054                   39,791                      
               1993              23,463                   14,795                      
                       244,178                       258,352                          


               5 This includes gross income from Foxcroft, Oregon State               
          Board of Higher Education, interest and dividend income, and                
          income from pensions from the State of Oregon Public Employees              
          Retirement System and Portland Community College.                           





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