Ralph E. Wesinger, Jr. and Catherine R. Wesinger - Page 18




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          make a profit.”  Id.  Petitioner here testified, without any                
          supporting data, that he would need to sell approximately 40 cows           
          to make a profit, but in none of the years at issue did he ever             
          attempt to place 40 animals on his property.  It is therefore               
          doubtful that petitioner had any plan to profit in those years.             
               Thus, based on the above considerations, petitioner’s cattle           
          ranch does not appear to have been operated in a businesslike               
          manner.  This factor fails to indicate a profit objective.                  
          2. The expertise of the taxpayer or his advisors.                           
               Section 1.183-2(b)(2), Income Tax Regs., reads:                        
               Preparation for the activity by extensive study of its                 
               accepted business, economic, and scientific practices,                 
               or consultation with those who are expert therein, may                 
               indicate that the taxpayer has a profit motive where                   
               the taxpayer carries on the activity in accordance with                
               such practices. * * *                                                  
          Case law further explains that “While a formal market study is              
          not required, a basic investigation of the factors that would               
          affect profit is.”  Burger v. Commissioner, T.C. Memo. 1985-523;            
          see also Engdahl v. Commissioner, 72 T.C. 659, 668 (1979);                  
          Underwood v. Commissioner, T.C. Memo. 1989-625.  Moreover, in               
          considering this factor, courts have made clear that the focus is           
          upon expertise and preparation with regard to the economic                  
          aspects of the particular business, and failure to possess or               
          obtain expertise in this area will not be excused by study of               
          other aspects of the enterprise or by general business acumen.              







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