Harland and Shirley Stonecipher - Page 13




                                        -13-                                          
               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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