- 12 -
a single activity only if the farming activity reduces the net
cost of carrying the land for its appreciation in value. Sec.
1.183-1(d)(1), Income Tax Regs. Therefore, the farming and
holding of the land will be considered a single activity only if
the income derived from farming exceeds the deductions
attributable to the farming activity which are not directly
attributable to the holding of the land such as mortgage interest
and property taxes. Sec. 1.183-1(d)(1), Income Tax Regs.
Petitioner paid roughly $1,250 an acre for his property.
Similar property across the street from petitioner's property
sold for $20,000 an acre. Undoubtedly, petitioner's land has
appreciated in value. However, the claimed farming expenses
exceed the profit from farming by $16,270, even after making the
adjustments described above. Therefore, the farming activity is
to be considered separately from the holding of the land for
appreciation. Zdun v. Commissioner, T.C. Memo. 1998-296, affd.
without published opinion 229 F.3d 1161 (9th Cir. 2000).
Petitioner argues that we should consider the revenue from the
sale of the trees 20 years from now. Petitioner estimated that a
black walnut tree could sell for $3,000 to $4,000 per tree and
that he has thousands of trees. He provided no witnesses as to
the value of the trees in 20 years and was inexact about the
number of trees he owned. Nevertheless, we believe the trees
have some value and take that into consideration.
We consider the success of the taxpayer in carrying on other
similar or dissimilar activities. There is no evidence that
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011