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Petitioner’s approach to the acquisition of the property
was apparently carefully considered and focused on creating a
tree farm. Petitioner worked for the CDF for 25 years as an
analyst; much of his experience seems relevant to the development
and operation of a tree farm. Petitioner conducted a
“prepurchase economic feasibility study” which showed the
property to be commercially viable. In reliance on the results
of the study, petitioner purchased the property. Petitioner
consulted with an expert on how to maximize the property’s
usefulness and had the FMP prepared. Petitioner conducted an
unsuccessful pilot planting to ascertain whether his property
could commercially support Coulter pines.
The foregoing facts, viewed in the light most favorable to
petitioner, clearly show that petitioner was, and apparently
still is, investigating the feasibility of creating a tree farm
on his property. Any expenses he has incurred in this regard are
start-up expenses for which no current deduction is allowed.4 As
a result, we shall grant respondent’s motion, which requires that
we deny petitioner’s motion.
3(...continued)
mortgage interest and taxes were allowable under secs. 163(a) and
164. We direct the parties to address, in the Rule 155
computation, the proper tax treatment of these items.
4Start-up expenses are deferred expenses which, at the
election of the taxpayer, may be amortized over the 60-month
period beginning in the month in which the active trade or
business begins. Sec. 195(b)(1), (c).
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