- 10 - decided to forgo income from haying or pasture rental in an attempt to reduce the farm’s operating costs and that petitioner’s attempt to reduce cash losses shows that he had a profit motive, citing Nickerson v. Commissioner, 700 F.2d 402 (7th Cir. 1983), revg. T.C. Memo. 1981-321. We disagree. Although he listed the activity as a livestock/hay operation on his 1995, 1996, and 1997 Schedules E, petitioner produced no hay or livestock and made no attempt to derive income from hay or livestock during the years in issue. Further, there is no evidence that petitioner had a bona fide plan to ever make a profit from planting and growing trees. This factor favors respondent. 2. The Expertise of the Taxpayers or Their Advisers Efforts to gain experience, a willingness to follow expert advice, and preparation for an activity by extensive study of its practices may indicate that a taxpayer has a profit objective. Sec. 1.183-2(b)(2), Income Tax Regs. A taxpayer’s failure to obtain expertise in the economics of an activity indicates that he or she lacks a profit objective. Burger v. Commissioner, 809 F.2d 355, 359 (7th Cir. 1987), affg. T.C. Memo. 1985-523; Golanty v. Commissioner, 72 T.C. 411, 432 (1979). Petitioner contends that he had the necessary expertise to operate a farm because he was born and raised on the Mitchell farm, he had extensive conversations with other farmers in thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011