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holding of the land will be considered a single
activity only if the income derived from farming
exceeds the deductions attributable to the farming
activity which are not directly attributable to the
holding of the land * * *.
At the time of trial, the Arkansas ranch was on the market
for $1.5 million. Petitioners argue the unrealized appreciation
in the Arkansas ranch should be taken into account in determining
the profitability of the Schedule F activity. We disagree.
Petitioner’s investment in the land encompassing the Arkansas
ranch was an activity separate from the Schedule F activity. The
Schedule F activity did not produce profits that reduced the net
costs of carrying the land.
8. Elements of Personal Pleasure or Recreation
“The presence of personal motives in * * * carrying on of an
activity may indicate that the activity is not engaged in for
profit, especially where there are recreational or personal
elements involved.” Sec. 1.183-2(b)(9), Income Tax Regs.
Clearly, petitioner took pride in his competitive abilities and,
we assume, enjoyed the competitions. Petitioner and his wife
lived on the Arkansas ranch, in a 5,700-square foot house with a
pool. They moved there prior to his retirement from Wal-Mart.
Depreciation schedules attached to Schedules F for 1988 through
1995 show a substantial investment in physical improvements to
the ranch: Depreciation is the largest expense item listed on
petitioners’ Schedules F for 9 out of the 10 years, 1986 through
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