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that petitioner believed he would be able to put together a
profitable operation through better management of the land.
Petitioner's testimony and demeanor, combined with other
evidence, convince us that petitioners had an actual and honest
objective of making a profit in conducting their ranch activity.
During the years in issue petitioner hired Dr. Haaland, an
agricultural consultant, who evaluated the ranch's operations and
developed a complete business plan for the ranch. See Hoyle v.
Commissioner, T.C. Memo. 1994-592 (proof of detailed business
plans and projections are evidence of a profit motive).
Respondent concedes that Dr. Haaland is an expert in his field,
and that MacCarty, a well-respected and qualified rancher managed
Flying H during the years in issue. Respondent further concedes
that petitioner never expressed to MacCarty that he did not care
whether the ranch was profitable, and neither petitioner nor his
business managers ever suggested a method of operation to
MacCarty that was inconsistent with a profit objective.
Furthermore, part of MacCarty's compensation was based on
whether the ranch operations came in under budget, and he had a
commission arrangement for cattle sold.
Respondent concedes that petitioner was actively involved in
reviewing the business plans and annual budgets for Flying H, and
that he spent substantial time at the ranch talking with MacCarty
about options for the ranch's most productive use. Petitioner
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