-16-
Petitioner’s statement reveals that he viewed the ranch
activity as having no profit potential for the years in issue,
during which petitioners were continuing to acquire significant
acreage, improve it, and put cattle on it. Rather, it appears
that petitioner actually anticipated incurring losses from the
ranch activity over a long period, including the years in issue
and thereafter. Petitioner’s anticipation of these ongoing
losses as being practically inevitable, rather than the result of
unpredictable events, signals the absence of an actual and honest
profit objective with respect to the ranch activity during the
years in issue. See Mattfeld v. Commissioner, T.C. Memo. 1992-
273, affd. without published opinion 15 F.3d 1087 (9th Cir.
1994). We are not persuaded that these losses are attributable
merely to a startup period, of a kind which is customarily
necessary to bring such an activity to profitable status,
especially since petitioner’s annual selling off of female calves
during the first 10 years of operation was inconsistent with his
own asserted business plan.
Petitioners’ witnesses gave vague testimony based on general
observations and not supported by a professional and thorough
appraisal of petitioners’ cattle ranch activity.
On the basis of all the evidence, we conclude that
petitioners have failed to establish that they engaged in the
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