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Petitioners offered no evidence that they changed their
operations.
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.
See 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. See 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 profitable tree farm and that he learned the basics
from his parents. However, petitioner did not specify how he was
involved in his parents’ tree farming activity.
Petitioner contends that he sometimes sought advice from his
botanist neighbors about growing trees and that he attended an
evergreen seminar in 1995. However, petitioners did not show
that they had expertise relating to the tree farming business,
or seek expert advice on how to operate their farm for profit.
This factor favors respondent.
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Last modified: May 25, 2011