Robert and Karen O'Connor - Page 9




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          of disrepair.  Many of the donated vehicles were inoperable and             
          had not been registered for several years.  Some of the vehicles            
          were over 30 years old.                                                     
               CBR did not begin its formal operations at the ranch                   
          property until after the years in issue.  By the end of 1998,               
          some of the buildings and infrastructure were in place, and CBR             
          was making final preparations to open the ranch property for its            
          charitable purposes.  In 1999, CBR began operating a program in             
          conjunction with Remi Vista, a section 501(c)(3) organization               
          that has operated homes for boys for approximately 27 years.                
                                       OPINION                                        
               The first issue we consider is whether the losses claimed in           
          Omega’s farming activity for 1993, 1994, and 1995 were incurred             
          in an activity carried on with an actual and honest profit                  
          objective within the meaning of section 183.  Respondent                    
          determined that the activities were “not engaged in for profit”             
          within the meaning of section 183(a).  Petitioners must show that           
          respondent’s determination is erroneous.  See Welch v. Helvering,           
          290 U.S. 111 (1933).                                                        
               It does not appear that Omega engaged in regular and                   
          continuous farming activity.  Instead, Omega leased the 1,400               
          acres of agricultural property from CBR and in turn leased the              
          same acreage to a third party under a per-head grazing                      
          arrangement.  Omega depended upon the third-party lease, some of            






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