- 14 - losses for that reason, we believe he had no basis for a bona fide profit expectation because he had no sources of income from the farm. This factor favors respondent. 7. Amount of Occasional Profits, If Any The amount of any occasional profits the taxpayer earned from the activity may show that the taxpayer had a profit objective. Sec. 1.183-2(b)(7), Income Tax Regs. Petitioner received no revenues from the farm from 1992 to 1998. Petitioners concede that this factor favors respondent. 8. Financial Status of the Taxpayer The receipt of a substantial amount of income from sources other than the activity, especially if the losses from the activity generate large tax benefits, may indicate that the taxpayer does not intend to conduct the activity for profit. Sec. 1.183-2(b)(8), Income Tax Regs. Petitioners had nonfarm income of $69,704 in 1995, $69,258 in 1996, and $71,050 in 1997, and they claimed Schedule F losses of $8,818, $7,468, and $9,012, respectively. Petitioner testified credibly that he could not afford to lose money from the farm. Petitioners did not have a substantial amount of income against which to deduct their losses, and they did not enter the farming activity to produce losses to offset their income. See Callahan v. Commissioner, T.C. Memo. 1996-65, affd. 111 F.3d 892 (5th Cir. 1997); Roberts v. Commissioner, T.C. Memo. 1987-182 (taxpayers, who were notPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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