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Before, during, and after the years in issue, the limited
time petitioner spent working in the cattle ranch activity is
inconsistent with a legitimate for-profit objective. The lack of
formal books and records, of a ledger, of a budget, and of a
meaningful business plan for the ranch indicates that
petitioners’ ranch activity was not carried on in a businesslike
manner.
Petitioners used the ranch for a personal residence and
apparently intended to retire there. Petitioners’ ranch activity
realized losses every year, and from 1983 through 1997 it
accumulated, before depreciation, approximately $700,000 in total
losses.
Petitioner acknowledges that he had no expectation of
realizing income from the ranch in any of the early years.
Petitioner states that his intention for the ranch was, over the
course of 15 years, to retain female calves born each year and,
by breeding the cows, to build up the cattle herd to 500 mature
cows and to build up the total ranch acreage to 2,000 acres. At
that point, by the sale of female calves that would be born each
year, petitioner claims that he expected the cattle ranch to
provide comfortable retirement income for him and his wife.
Petitioner’s assertions as to his long-term strategy with
regard to the ranch are undermined by the lack of breeding and
calving records and by petitioners’ sale each year (at least
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