- 7 -
accurate records. Id. The fact that an individual adopts a
different method of operating or abandons unprofitable methods
with respect to operating his or her activity may suggest a
desire to earn a profit. Id.
Petitioners have failed to persuade us that they conducted
their breeding activity in a businesslike manner. They rely
merely on their subjective expressions of intent, as well as the
limited testimony of family members. Petitioners did not produce
any of their activity’s records at trial. They did not establish
that they used "cost accounting techniques that, 'at a minimum,
provide the entrepreneur with the information he [or she]
requires to make informed business decisions." Burger v.
Commissioner, 809 F.2d 355, 359 (7th Cir. 1987) (quoting Burger
v. Commissioner, T.C. Memo. 1985-523), affg. T.C. Memo. 1985-523.
They did not demonstrate that they monitored expenses or assessed
their activity's profitability. They did not establish that they
maintained a budget for their activity, or that they advertized
any of their cattle for sale. Although Mr. Vallette testified
without contradiction that he tried before the subject years to
remedy his problem with “bad cattle” by switching his breed of
cattle to a breed that his “common knowledge” told him was the
better breed, we do not believe that this self-supporting
statement standing alone is enough to establish a profit intent.
The fact that petitioners’ activity experienced losses year after
year, and that they took no action to explain the losses or to
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011