- 8 -
Petitioners timely filed joint Federal income tax returns
for 1994 and 1995. In November 1997, they signed Form 872,
Consent to Extend the Time to Assess Tax, extending the period to
assess tax for 1994 to June 30, 1999.
Respondent sent a notice of deficiency to petitioners on
June 23, 1998, in which respondent determined that petitioners’
tree farm was not operated for profit in 1994 or 1995.
OPINION
A. Whether Petitioners Operated Their Tree Farm for Profit
The first issue for decision is whether petitioners operated
their tree farm for profit in 1994 and 1995. A taxpayer conducts
an activity for profit if he or she does so with an actual and
honest profit objective. See Osteen v. Commissioner, 62 F.3d
356, 358 (11th Cir. 1995), affg. in part and revg. on other
issues T.C. Memo. 1993-519; Surloff v. Commissioner, 81 T.C. 210,
233 (1983); Dreicer v. Commissioner, 78 T.C. 642, 645 (1982),
affd. without opinion 702 F.2d 1205 (D.C. Cir. 1983). In
deciding whether petitioners operated their tree farm for profit,
we consider the following nine nonexclusive factors: (1) The
manner in which the taxpayer carried on the activity; (2) the
expertise of the taxpayer or his or her advisers; (3) the time
and effort expended by the taxpayer in carrying on the activity;
(4) the expectation that the assets used in the activity may
appreciate in value; (5) the success of the taxpayer in carrying
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