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regulations thereunder, and therefore property held merely for the
production of income does not qualify as section 179 property.
Sec. 1.179-2(c)(6)(i), Income Tax Regs.
“Active conduct” as used in section 179 means that the
taxpayer actively participates in the management or operations of
the trade or business. Sec. 1.179-2(c)(6)(ii), Income Tax Regs.
A passive investor does not actively conduct a trade or business.
See id.
According to petitioner’s testimony, his farm has no
structures other than fences and there were no crops raised on the
farm in 1993. Petitioner further explained that “Because the
acreage is small--it’s 22 and some few tenths acres--it is not
sufficiently large, and we don’t have an allocated poundage
allotment authorized by the government to produce a lot of tobacco
on it to pay expenses.”
We shall, nevertheless, assume for the sake of argument that
in 1994 the farm activity was conducted at the level of a “trade
or business” as that term is used in section 162. To be entitled
to the deduction, petitioner must show in addition that he
“meaningfully participated” in the management or operations of the
trade or business. See sec. 1.179-2(c)(6)(ii), Income Tax Regs.
Petitioner testified that he took farm equipment from Virginia to
the farm in 1994 and “cleaned fence rows”, but he also testified:
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