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Petitioner has never reported a profit from TSI on his tax
return.
For 1991 and 1992, petitioners filed Schedules F for an
activity called Twin Star Ranch (TSR). The Schedules F reflect
gross income of $475 and expenses of $28,327, for 1991, and gross
income of $1,050 and expenses of $37,747, for 1992. A list of
the Schedule F deductions is attached as appendix C.
Petitioners started their 7�-acre ranch in 1982, after
petitioner retired. Petitioners have never reported a profit
from TSR on their tax return. They did not take any farming or
animal husbandry courses in college. From 1988 through the time
of trial, however, petitioner attended seminars at the University
of California at Davis covering a variety of animal-related
topics, such as breeding, raising, feeding, and medically caring
for animals.
In 1991, petitioners' farm consisted of a flock of 20 to 25
sheep, some chickens and peacocks, one horse, and four cattle.
In 1991, petitioners advertised a cockatiel and a ram for sale in
the local newspaper. In 1992, petitioners did not advertise
anything for sale from their farm. In 1992, petitioners
purchased two more horses. None of petitioners' horses were
stallions, and they did not breed horses in either 1991 or 1992.
In 1991 and 1992, petitioners sold only sheep and eggs; they
deducted $90 for butchering in 1992. Petitioners' farm had an
unlisted phone number.
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