- 28 -
Respondent contends that petitioner used Granot Loma as a
residence, and that LFI did not own Granot Loma and did not
operate a trade or business or otherwise engage in any activity
for profit during the relevant years. As we understand it,
petitioner’s argument is that, from the date petitioners
purchased Granot Loma, Granot Loma was a business asset that
petitioner and then LFI used in one or more business activities
for profit. The activities that petitioner alleges he or LFI
conducted for profit at Granot Loma include a Christmas tree
farm, a timbering operation, a maple syrup operation, and a
rental activity. Petitioner also alleges that petitioners and/or
LFI acquired Granot Loma with the intent of renovating and
operating it as a commercial property or selling it for a profit.
For the reasons set forth below, we agree with respondent.
From the time petitioner and his wife purchased Granot Loma
in 1987, petitioner was determined to claim that Granot Loma was
a business and began to deduct Granot Loma’s expenses, initially
for 1987 on a Schedule F, and then through LFI, an S corporation.
For 1988, petitioner, through LFI, claimed deductions for
depreciation of Granot Loma buildings and improvements (including
the lodge which was uninhabitable and in the process of being
renovated), other alleged operating expenses, and some of the
expenses incurred in renovating the lodge, claiming that Granot
Loma was an operating Christmas tree farm. For 1990 through
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011