- 2 -
The principal issue presented for our consideration is whether
petitioners' operation of a farm was an activity not engaged in
for profit within the meaning of section 183.1 If we find the
activity was not engaged in for profit, then we must decide
whether legal expenses incurred by petitioners may be deducted
under section 162 or 212 as ordinary and necessary expenses
incurred with respect to property held for investment.2
FINDINGS OF FACT3
At the time of the filing of their petition, petitioners
Charles H. Butler and Judith K. Butler resided in Pescadero,
California. Charles H. Butler (hereinafter referred to as
petitioner husband) was an engineer who designed power plants.
Petitioner husband possessed bachelor's and master's degrees in
engineering. Judith K. Butler (hereinafter referred to as
petitioner wife) graduated from high school.
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
2 Petitioners conceded adjustments in the amounts of $1,805
and $423 with respect to their real properties at Arnold Way,
Half Moon Bay, Cal., and Stage Road, Pescadero, Cal., and
respondent has conceded that in the 1993 taxable year petitioners
are entitled to an additional deduction of $4,859, which
represents a portion of a 1992 passive activity loss adjustment.
3 The parties' stipulation of facts and exhibits are
incorporated by this reference.
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