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Ranch
Gross Net Petitioners’
Year Income* Expenses Income (Loss) Nonranch Income
1983 $ 84,463 $ 308,325 ($ 223,862) $ 533,198
1984 273,261 277,859 (4,598) 51,615
1985 42,110 288,626 (246,516) 171,230
1986 99,486 359,717 (260,231) 452,981
1987 74,300 241,417 (167,117) 265,788
1988 61,827 189,266 (127,439) 394,278
1989 24,926 213,277 (188,351) 515,927
1990 37,835 182,132 (144,297) 543,930
1991 78,268 170,663 (92,395) 593,948
1992 44,038 144,645 (100,607) 556,674
1993 73,102 151,937 (78,835) 472,653
1994 33,490 147,758 (114,268) 485,229
1995 106,388 95,934 10,454 514,322
1996 22,572 55,392 (32,820) 372,676
Total $1,056,066 $2,826,948 ($1,770,882) $5,924,449
* Each year for 1986 through 1996, petitioners
received $22,044 from the U.S. Department of
Agriculture for the 550 acres of ranch land that
was under the Government conservation program.
This $22,044 is included in annual ranch gross
income.
As reported, petitioners’ net ranch losses offset petitioners’
nonranch income consisting primarily of petitioner’s income from his
medical practice. As a result, petitioners greatly reduced
their reported Federal income tax liability for 1983 through 1994.
On audit for 1993 and 1994, respondent determined that the
ranch was not operated for profit, and respondent disallowed under
section 183 petitioners’ claimed ranch losses in excess of income
derived from the ranch.
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Last modified: May 25, 2011