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matter. We sustain respondent’s determination of the allowable
mortgage interest expenses.
3. Orange Grove, Cattle, and Ferrari Activities
FINDINGS OF FACT
Petitioner had an orange grove of approximately 800 trees
near his personal residence, which covered approximately 17 to 18
acres. When petitioner moved to his personal residence in or
about 1981, the orange grove was old with at least a portion of
it having been planted in the 1920s. Petitioner was not in the
growing business, and he allowed the orange grove to deteriorate.
After a bad freeze in 1985, petitioner let the orange grove
go for a year without spraying it (without putting any herbicide
or fertilizer on the trees). Petitioner replaced a considerable
number of old trees and dead trees with 690 new trees. The
orange grove had an irrigation system which needed repairs, and
the orange grove required fertilizer and herbicide treatment.
Petitioner paid $10,000 on June 22, 1987, and $6,371.53 on June
1, 1988, to Irrigation Engineers for certain irrigation work done
on petitioner’s orange grove. Petitioner did not maintain any
books or records for the orange grove, except for his checkbook.
Petitioner has never made a profit from selling oranges.
Petitioner also owned cattle during the tax years at issue.
Petitioner was advised by Michael Partin, a rancher, that the
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