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and farming activities in a businesslike manner.7
B. Expertise of Petitioners and their Advisors
A taxpayer’s expertise, research, and study of an activity,
as well as his consultation with experts, may be indicative of a
profit motive. See sec. 1.183-2(b)(2), Income Tax Regs. Growing
up, petitioners acquired experience in raising and maintaining a
limited number of cattle but not in running an entire ranching
and farming operation.
Petitioners, however, hired ranch managers for their ranches
and sought advice from local Government conservation agencies
with regard to maintaining the four properties. These facts
indicate that petitioners had a profit motive.
C. Time and Effort Expended by the Taxpayer
Because of their busy medical practices, petitioners devoted
a very limited time to their ranching and farming activities. A
taxpayer, however, can show a profit motive if he has employed
competent and qualified persons to carry on the activity. See
sec. 1.183-2(b)(3), Income Tax Regs. In the instant case,
petitioners employed various people to maintain and care for
their four properties. Petitioners’ actions indicate a profit
motive.
7 Sec. 1.183-2(b)(1), Income Tax Regs., provides that
abandonment of unprofitable methods may indicate a profit motive.
Petitioners argue that when they abandoned their purebred cattle
operation in 1989, they attempted to limit their losses.
Although we find some merit in petitioners’ argument, it does not
affect our overall conclusion that for the years in issue
petitioners did not conduct the ranching and farming activities
in a businesslike manner.
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