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on which they conducted their cattle activity.17 With respect to
those portions, we find that petitioners had reasonable cause for
the underpayment. We have found that petitioners conducted their
cattle activity with the requisite profit motive to avoid the
restrictions of section 183. In these circumstances, their
failure to adhere to the precise requirements of the regulations
requiring the treatment of farming and landholding as separate
activities does not, in our view, reflect a lack of effort to
assess their proper tax liability.
As for any remaining portions of the underpayments for the
years in issue, such as those attributable to petitioners’
failure to substantiate claimed deductions, petitioners have not
addressed the issue, and we accordingly sustain respondent’s
determinations.
In light of the parties’ concessions and the foregoing,
Decision will be entered
under Rule 155.
17 For example, underpayments may exist as a result of the
limitations imposed by sec. 163(d) on the mortgage interest
deductions claimed by petitioners on Schedules F.
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