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On the basis of petitioner’s testimony, we cannot agree that
petitioner incurred his expenses while carrying on a trade or
business. At best, petitioner in 1985-1988 had an aspiration
that one day the orange grove would be capable of producing fruit
and that the fruit could be sold as part of an ongoing trade or
business.70 Indeed, from petitioner’s testimony, it is clear
that his aspirations have not changed at the time of the trial in
this case, some 13 years later.
The fact that an activity has recreational aspects is an
important factor in determining whether petitioner has the
requisite profit motivation. See Nichols v. Commissioner, supra;
sec. 1.183-2(b)(9), Income Tax Regs. Although cattle, unlike
horses, and an orange grove are not activities which one might
think of as providing the type of personal pleasure or
gratification that might supplant a profit motivation, see Allen
v. Commissioner, supra at 36, at trial, petitioner testified:
The grove really went downhill. I bought it and
I’m not in the growing business--I was out there
chasing cows--and gradually I figured out, similar to
the cow situation, you can’t afford to be in the cow
business unless you own the land. And I owned a large
piece of land that I was already buying and talked to
Mike Partin and he said if you can’t make enough out of
the cows to pay for the land--but cows can be a good
investment and I enjoy the animals.
70Similarly, petitioner testified with respect to his
claimed cattle business that “Basically, I never got up to the
point that I was really producing stock, and so forth, that I
would be selling into it and know myself.”
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