- 18 -
Commissioner, supra at 34. Although a long history of losses is an
important criterion, it is not necessarily determinative. See
Engdahl v. Commissioner, 72 T.C. at 669; Allen v. Commissioner,
supra. For instance, a series of startup losses or losses
sustained because of unforeseen circumstances beyond the control of
the taxpayer may not indicate a lack of profit motive. See Engdahl
v. Commissioner, supra; sec. 1.183-2(b)(6), Income Tax Regs.
Petitioners were engaged in cattle raising for nearly 20
years, sustaining losses well past the length of time that can be
called the “startup” period.
Petitioners maintain that severe drought and large
fluctuations in the price of cattle caused most of their losses.
We do not agree with this claim. On the basis of climate and
meteorological data from the years in issue, it is apparent that no
drought existed in those years. These losses were not unforeseen.
Even if it were assumed that drought or fluctuations in the market
price of cattle contributed to the losses, petitioner was raised on
a cattle ranch in that region of Texas and on the basis of his
personal experiences, as well as the advice he received from
experts, knew that the region was susceptible to drought and that
the price of beef often fluctuated. Petitioners failed to take
substantial remedial action to compensate for these conditions
which, petitioners apparently claim, existed for nearly 20 years.
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