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effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
This Court must decide: (1) Whether losses incurred by
petitioner on the sale of hog futures are capital losses or
ordinary losses, and (2) whether petitioner is liable for the
accuracy-related penalty under section 6662(a).
This case was submitted fully stipulated pursuant to Rule
122. All of the facts stipulated are so found. Petitioner had
its principal place of business in Lime Springs, Iowa, at the
time the petition was filed.
Petitioner was incorporated in Iowa on March 1, 1993, and is
engaged in the farming business. Petitioner raises corn, soy
beans, and cattle. Petitioner uses its corn and soy bean crops
either to feed its cattle, which it raises and markets, or to
sell to two other corporations, Grow Pork, Inc. (Grow Pork) and
Reis Ag Ltd. (Reis Ag).
Grow Pork is engaged in the hog farrowing business. Grow
Pork breeds sows, raises the baby pigs until they weigh
approximately 60 pounds, and then sells them to the entities
controlled by the owners of Grow Pork, including Reis Ag. Reis
Ag is engaged in the hog finishing business. Reis Ag obtains
pigs when they weigh approximately 60 pounds, feeds and raises
them, and then sells the hogs. Petitioner sells the grain to
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Last modified: May 25, 2011