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maintain and retrieve proper records when required to do so. No
records of the number of livestock were maintained. Petitioner
husband intended to go into the farming business so that he could
leave the engineering profession. He expected to make a profit
once his herd doubled in size. Petitioners believed the main
obstacle to profitability to be availability of water for the
livestock. Petitioners believed that this factor prevented the
number of livestock from expanding.
Petitioners, on their joint Federal income tax returns,
reported the following items:
1987 19891 1990 1991 1992 1993
Wages $82,107 $76,000 $88,300 $65,678 $105,344 $52,532
Interest income 4,542 11,510 14,936 21,478 9,019 9,568
Farm gross income 198 N/A N/A 715 1,919 (600)
Farm expenses (23,470) (37,538) (32,613) (64,086) (164,566) (61,111)
Net farm income or (loss) (23,272) (36,989) (32,613) (63,371) (162,647) 2(61,711)
1The record does not provide information regarding the 1988 taxable year.
2Petitioners apparently added the loss of $600 to the total expenses of
$61,111 for a net loss of $61,711.
Petitioners reported that the principal product of their farming
activity was "General Livestock". Petitioners, on their 1991,
1992, and 1993 Schedules F (Profit or Loss from Farming), claimed
attorney’s fees as "Labor hired", in the amounts of $45,961,
$139,397, and $43,004, respectively.
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