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profit objective was lacking. Hence, according to respondent,
petitioners were not entitled to deduct losses sustained in the
ranching and rental operations and are liable for the
deficiencies determined by respondent. We agree with respondent
that, on these facts, petitioners failed to establish the
mandatory profit objective.
Evidentiary Issue
As a preliminary matter, before addressing the substantive
issues related to profit objective, an evidentiary objection
raised by respondent must be decided. Respondent filed a motion
in limine to exclude the testimony of petitioners’ expert,
Jonathan Cosby, a certified public accountant. The Court
permitted petitioners to make an offer of proof and reserved
ruling on the admissibility of the evidence.
Rule 702 of the Federal Rules of Evidence, which governs the
admissibility of expert testimony, reads as follows:
If scientific, technical, or other specialized
knowledge will assist the trier of fact to understand
the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience,
training, or education, may testify thereto in the form
of an opinion or otherwise.
Here, Mr. Cosby’s testimony fails to meet this standard.
His statements were neither specialized in nature nor helpful to
the Court. His in-court testimony consisted of broad
generalizations (e.g., neither absence of a business plan nor
failure to consult with experts necessarily indicates lack of
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